Lockdown forces JSW steel to scale down production at steel plants

India's second largest steelmaker JSW Steel on Thursday said it was scaling down and could possibly even suspend production at its steel plants in view of the ongoing 21-day lockdown in the country.

Unlike other factories, shutting down a steel plant especially the blast furnace, which is at the heart of it, is a difficult and expensive proposition. JSW said scaling down of production was being done even as steel is classified as an essential commodity and it is not mandatory for factories to be shut down.   

"JSW Steel Ltd has been taking various precautionary measures to ensure the safety and health of the employees and their families, at all its offices and manufacturing locations in India and abroad. Following the clarion call given by our honourable Prime Minister on 24/03/2020 for a 21 day nationwide lockdown (w.e.f March 25, 2020) and the various advisories/directives issued by local Municipal Corporations, State and Central Governments considering the evolving scenario of complete lockdown with exception to certain specified essential activities, the manufacturing operations in all of our locations have since been either scaled down or suspended (in certain locations)," the company said in a statement to the Bombay Stock Exchange.

"Consequently, the capacity utilisation is expected to go down significantly during this period of lockdown. The Company has taken the decision to scale down / suspend production to support the cause of containment of the pandemic COVID-19, notwithstanding the exception to manufacturing units with continuous operation and the units producing essential commodities (Steel is classified as an essential commodity under the Essential Services Maintenance Act, 1981 (ESMA))."

In the April-December 2019 period, JSW produced 12.09 million tonnes of steel in the country which was 3 percent less than 2018. It lagged Tata Steel which produced 13.46 million tonnes of steel during this period.

"The overall adverse impact on the operations of the company during the period of this lockdown, on account of the above and the expected financial impact, is not ascertainable at this stage," it said. "The Company will continue to closely monitor the situation and take appropriate action as per the directions issued by regulatory authorities from time to time, keeping in view the health and safety of all of its employees and their families and the interest of the nation at large."

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