JSW Steel shifts UK service centre to Karnataka

JSW Steel has shut down its five-lakh-tonnes-per-year capacity in the United Kingdom, and shifted the entire machinery to its Vijayanagar steel plant in southern India.

Seshagiri Rao, joint managing director and group CFO of the company, said the service centre has now been shifted and commissioned at its upstate Karnataka plant. As on date, the JSW Steel has completely exited the UK market, as the service centre was its sole operation in that European country. At present, the company, which is part of the O P Jindal Group, owns only the land where it had its service centre, Rao informed.

The UK company was named JSW Steel Service Centre (UK) Ltd, and had three slitting lines and one multi-strand blanking line. JSW’s 100 per cent Indian subsidiary, JSW Steel Processing Centres Ltd, bought these assets from the UK company for an undisclosed sum.

The plant has an annual hot-rolled and cold-rolled slitter and cut to length facility of 5 lakh tonne at the Vijayanagar facility in Bellary district. In the last fiscal, the company processed 4.9 lakh tonne of steel from this service centre. In FY09, the company processed only 3.04 lakh tonne of steel due to the weak UK steel market.

Service centres are generally set up near the auto and consumer durable production hubs to deliver custom-cut steel to customers.

The 1982-founded company is now expanding its presence in the service centres area in a big way. Apart from shifting the UK plant to India, in October last year, JSW Steel and Marubeni-Itochu Steel Inc Tokyo signed a joint venture agreement to set up a steel processing center in northern India. The JV has been named JSW MI Steel Service Centre Pvt Ltd. JSW will hold half the equity and the other 50 per cent will be held by MISI.

The total cost of the service centre is Rs 130 crore. It will be funded through 50 per cent equity — equally from both the partners. The 50 per cent debt element would be raised from banks. The first phase of the project is expected to come on stream in FY13, with an initial installed capacity of 1.8 lakh tonne per annum.

JSW said the JV company would be equipped to process flat steel products such as hot-rolled, cold-rolled and coated products with a view to offer just-in-time solutions to the automotive, white goods, construction and other value-added segments.

This will be the second service centre of JSW Steel in India. The first was the UK one, which is now shifted to India. Rao said the Vijayanagar service centre would be the mother service centre with the highest capacity of 5 lakh tonne. JSW Steel is not the only company which has shut its overseas plant and shifted the production to India. Earlier, Hindalco Industries also decided to shut its acquisition Novelis Inc’s Rogerstone can-body plant to its Hirakud facility in India.

The machinery has reached Indian shores and is expected to be commissioned in early this year.