Q. Has the volatility in Stainless Steel prices affected profit margins in the recent past?
A. Stainless Steel prices have been volatile for quite some time but fluctuation would be short-lived and over the year it will get corrected. It is only for a certain period of time that there is price pressure mainly due to fluctuation in raw material prices. But we try to mitigate this volatility through long-term contracts with OEMs, which is a continuous process in a business which focuses on high value-added grades that give us a hedge through price fluctuations. For example, cars do not sell within a month and therefore with such specialized steel products and OEMs in the automotive industry the risk of price fluctuations is safely mitigated.
Q. How do you see the year 2018 for the stainless steel market in terms of demand and prices?
A. India is the fastest growing stainless steel market with a CAGR of 10%. India is a very nascent market for stainless steel and so the per capita consumption is of around 2 kg, where the world average is at 4.5kg. In India, there is a huge push coming in from auto segment, Railways and infrastructure projects by the government and private sector. So the demand is going to be robust in 2018.
Q. Can you elaborate on JSHL’s expansion plans in 2018?
A. We are first aiming to optimize utilization of our existing facilities, we are now at about 85-90% capacity utilization and the first endeavor is to reach 100%. Then we can look at other possibilities and expansion plans. We have also requested permission for a 300-acre facility next to our Jajpur plant( Jindal Stainless Limited) for downstream industry projects. According to our plan, we intend to offer land, electricity, water, etc to various companies to come and set up their downstream units. This is another way of pushing the demand for various applications and taking stainless steel into the larger market. Other than this right now we are not looking for expansion. Our main focus right now is to consolidate, start earning, pay back all the loans and after that, we will look for further expansions. We certainly intend to expand in the stainless steel industry but that would be only after our internal financial environment is conducive. This is the reason why we have restructured JSL adding Jindal Stainless (Hisar)Ltd (JSHL)as a separate entity. The restructuring helped to cut down the debt, so the debt has been reduced for JSL to Rs 2500 crores now.
Now JSHL is out of CDR and is a strong standalone entity while JSL has also managed to reduce its debt significantly leading to rating upgrades. JSHL has entered into defense grade and long products. Backed by a strong R&D team and advanced equipment we have certainly increased our focus towards the defense sector for raw materials supply. We have been supplying to armor proof applications, Blast proof applications, Rocket Canisters and here ever special steel is required.
Q. Are there any plans of diversification?
A. Diversification has been part of JSHL to promote stainless steel to a wider market and the off shoot is JSL Arc & JSL Life style Ltd which supplies a lot of products to railways. We have made all the lifestyle products under the brand name Arttdinox. We are also making kitchens which have huge potential to grow in the markets supplying to hotels, hospitals, private households, industrial as well as promotional kitchens. Right now we are focusing a lot on branding and promotions. At the exports end, electronics goods manufacturer Whirlpool is one of our biggest clients in terms of kitchen facilities. But our main focus is to grow in the Indian market; create market and encourage other players to set up units.
Q. Has Demonetization & GST left its impact on the industry
A. It has definitely affected the secondary players’ sales in the short term. I will take it as a positive move as it is bringing them under the preview of law and it is setting up systems for carrying out business activities in a correct way. It will be painful initially but will push them to compete not only with local players but also internationally.
Q. What has been the impact of imports on the domestic stainless steel industry?
A. Primarily imports are coming in from China, Indonesia, South Korea, Malaysia, Japan. Specially Chinese government is providing enough subsidies with which they can compete in the Indian markets easily. This is the biggest competition we are facing today. Indian Stainless steel industry continues to suffer from a surge in imports forcing capacities to remain idle. Import prices are significantly lower than domestic prices, especially from countries like China and Korea.
Q. On a personal front how has your journey after formally joining the business been?
A. Definitely, it is a challenge to be part of the family business. I am trying to focus on different areas where I can add more value. So I have taken up new projects like Defense & long products. Also, we have undertaken widespread digitization activities and are going paperless. I have a huge focus on training and development of employees, adding in of new projects and technologies. Stainless steel is a capital intensive the sector as a result of which there are a very few major players in the field. I will be more than happy to promote new facility for making stainless steel products I welcome people into the stainless steel manufacturing sector as the Indian market is growing. The rapid growth of middle-income groups has to lead to increase in purchasing power. In terms of downstream manufacturing, I would like to welcome people to come in to manufacture different stainless steel products to further promote its use.
Q. For someone as young as yourself, how was your learning part of the organization?
A. I never stop learning. I am of the belief that only through learning that I can improve the company. You are a student for life, which is why I am bringing the learning and development culture into the organization. Earlier our training process was more or less confined to classrooms, now we are focusing on individual effective training so that it will directly reflect on the productivity of the company. The Jindal stainless group has evolved into a professional and training based an organization, still adhering to the core values laid down by the Elders of the company, which is very much required in a family run organization.
Q. What is the future of Stainless Steel in India?
A. Stainless steel is one such metal which is corrosion free and the life cycle is strong and therefore its demand will continue to strengthen in future. With the potential application in the auto sector which has moved from BS4 to BS6 and is demanding lighter and stronger steel the demand for the metal is growing rapidly. Stainless Steel has huge benefits but the only overriding factor is cost. However, if we look at corrosion related loss, India loses almost 4 billion dollars a year. So Stainless steel is the metal that can stand strong for almost 60-80 years thus proving to be more cost-effective.