Mumbai: JSW Steel is eyeing a resurgence in its overseas operations in FY26, as capacity expansion, better realizations and the imposition of import tariffs aids its US subsidiaries while higher volumes and a better product mix lift the prospects of its Italian unit, a top company official said.
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While relatively small in scale compared to its sprawling domestic steelmaking empire, the cash hemorrhage at the company’s overseas units in the US and Italy had been eating into its consolidated margins.
“We will see better margins in the US. The operations in Ohio are stable. With better volumes and better pricing environment, we see the US contributing positively to the overall operations,” JSW Steel’s joint managing director Jayant Acharya said in an interview. The company runs a 1.5 million tonnes per annum (MTPA) electric-arc-furnace-based steel manufacturing unit in Ohio and a 1.75-MTPA plate and pipe production mill in Texas.
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In Italy, the company runs a 0.32 MTPA rail manufacturing unit, which it considers to be a strategically important asset. The facility is undergoing an expansion in capacity to 0.6 MTPA, with an ability to produce 120 metre-long rails compared to the 108 metres it produces currently.
“In this year we feel the Italian operations, which have been positive Ebitda (earnings before interest, taxes, depreciation and amortization), will contribute positively to our overall operations,” Acharya said.
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The Italian operations reported a loss in the fourth fiscal quarter due to a rail congestion in the country that not only affected the supply of products from its mill but also delayed orders from the country’s railways. This will reverse in the new fiscal, Acharya said.
He dismissed any talks of the company evaluating any divestment from its international units.
“We are not thinking of divesting the assets in Italy, for sure. And in the US also now, as you see, the operating environment has improved with the tariffs in place. Our expansions in Baytown (Texas) are getting completed. So at this point of time, I think we have a possibility of taking advantage of the operating environment,” Acharya said.
Expansion in India to bring down costs
JSW Steel is eyeing a reduction in costs in Indian in FY26 to shore up its margins amid tepid steel prices. The company will be operationalizing three iron ore mines in Karnataka during the year which will bring down its raw material costs. Similarly, it will be operationalizing one iron ore mine in Goa.
Meanwhile, its flagship mill in Vijaynagar in Karnataka will be completing its 5 MTPA capacity expansion, adding not just volumes but also bringing down costs. The newer assets will be significantly more efficient and produce steel at a lower cost than all of the company’s other assets in India, Acharya said.
At Vijaynagar, the company will be shutting one blast furnace in FY26 for maintenance and to increase its capacity by 1.5 MTPA. This will again help in lowering costs, he said.
“Larger blast furnaces are designed to deliver better fuel efficiency and lower the power costs. On top of that, we will have also the fixed costs being lowered,” Acharya said. The fixed costs will be lowered as they are spread over a higher volume and thus more revenue.
Procurement of renewable energy will also bring down the company’s energy cost, Acharya said. The company is looking to procure 1 gigawatt of renewable energy from fellow group company JSW Energy, of which 65-70% is already being supplied and the remainder will start in the coming two months, he said.
Source:https://www.livemint.com/companies/jsw-steel-india-fy26-overseas-operations-costs-jayant-acharya-import-tariffs-11748171848308.html