Due to reasons like issue in the global economy, high interest rates, slow pace of public infrastructure projects, steel demand & consumption, growth in the country has touched a new low in the current financial year. However, VK Mehta, Director, Sales & Marketing of Jindal Steel & Power Limited hopes that situation will improve and normalcy will return in the new fiscal.
Do you see the steel demand in India improving in the current fiscal?
There has not been any significant growth in the 10-month ended January 2014, as far as overall steel demand is concerned. The actual growth has been seen at only 0.5% in April-January period.
What are the basic reasons for slow growth in steel consumption?
There are a number of reasons for the slow growth. Firstly, there are issues in the world economy, high interest rate and of course paralysis in the government policy.
Are you optimistic about the demand growth in the new fiscal?
The steel demand has its connections with the overall GDP growth of the country. It always remains at par with or higher than the GDP growth rate. As the country is expecting about 5% growth in the new financial year 2014-15, I am hopeful that the steel demand in the country will improve to 5% or more. The World Steel Association has estimated that the steel consumption growth in India would be around 5.6% in the new financial year.
Basically, the current year has seen weak performance in the steel sector. But, normalcy would return in the coming fiscal when the new government takes charge.
Do you expect any push from the government for the consumption growth?
India has huge deficit in the infrastructure sector. The present government has plans to build 20 kilometers of road per day. But, hardly 5-6 kilometers of road is being built. Similarly, our port capacity is limited and the railways have hardly expanded. Now, two dedicated freight corridors are coming up. When all these projects would be streamlined, there will be lot of steel consumption which is going to boost the demand for steel in the country.
The present government in its ‘vote-on-account’ budget has announced some cut in excise duty for the automobile industry. What will be its effect on the Flat Steel industry?
It’ll be good for the steel industry because more automobile production can take place. In turn, it will give a boost to the Flat steel industry.
With a slowdown in the real estate industry, how do you see the price-graph of TMT Re-bars (Thermo Mechanically Treated Reinforced bars)?
Earlier, there was a mismatch between demand & supply which was suppressing the prices. At this point of time though I cannot say prices would go up, we expect demand recovery in the next financial year.
Can you elaborate your plans for the Angul plant? What is the size of investment the company is planning for Odisha in these projects?
About half of our planned capacity expansion will come from Angul, Odisha. We are planning to expand our overall capacity to 14 MnT from 5 MnT pa currently. Out of this, 4 MnT pa Blast Furnace capacity would be added to the current 2 MnT pa capacity at the Angul plant within a timeframe of 2-3 years. We are planning to commission the Re-bar mill of 1.2 MnT pa capacity within the next one year. The company has already commissioned its Plate mill of 1.5 MnT pa capacity last year and currently producing plate products. The capacity of the plate mill will be extended to 2 MnT pa.
Our investment in the first phase would be something around INR 18 billion and in the second phase we are looking at an investment of around INR 25 to 30 billion in Odisha.
Any plans to produce specialized steel products like the ‘autograde’ steel from the Angul plant?
Yes, once we have Hot Rolled facility in the project, it is in our strategic intend to add cold rolled and other facilities for production of specialized steel products.