JSW Steel, Tata Steel see no threat to business with ArcelorMittal's entry

Both companies see ample scope for new players in the market, where steel demand is likely to grow by a good 7-8% a year as against the global pace of demand growth of around 5%

Large domestic steel players see no threat to business even if Luxembourg-based ArcelorMittal enters the India market.

Both Sajjan Jindal's JSW Steel and Tata Steel, the country’s oldest alloy producer, see ample scope for new entities in the market, where demand is likely to grow by 7-8 per cent annually, against the global pace of 5 per cent. "The quality of steel we produce and the technology, along with cost efficiencies and product mix, are quite competent. I don’t think we have to be concerned about what others will do. In fact, we are already competing with the same players in the global market at present," said Seshagiri Rao, group chief financial officer at JSW.

ArcelorMittal has emerged as the preferred bidder for Essar Steel, which has a capacity of 10 million tonnes a year in Hazira, Gujarat. The company was preceded by stiff competition from Mumbai-based JSW and Numetal Mauritius (led by Russia's VTB Bank).

According to industry officials, Essar Steel does have scope for  expansion at the Hazira facility. Large-sized blast furnaces (multi-million tonne capacity), if installed, can take the capacity to 18 mt a year.

 “Healthy and mature competition is always welcome. As for us, we have the needed technology, equity and capabilities to compete with them -- we are familiar with this competition in the global market,” said T V Narendran, chief executive officer at Tata Steel. Apart from the Lakshmi Mittal-led ArcelorMittal, UK-based Liberty House will also be a new entrant in the domestic steel industry. It has acquired insolvent Amtek Auto and Adhunik Metalliks among National Company Law Tribunal-listed companies.

JSW has annual capacity of 18 mt, which it aims to take to 25 mt and then to 40-45 mt by 2030. Tata Steel aims to take their capacpity in India to 30 mt by 2025, from 13 mt now. The two are aiming to broaden their market share by differentiating the product line and transitioning from a volume-based to a value-based entity. “We already have 60-70 per cent of our business in (the) downstream (segment) and aim to grow this as we aim at customised products,” said Narendran. 

To maintain its 14-15 per cent of market share, JSW aims to take its downstream business to 60 per cent of the total from the current 35-40 per cent. 

“De-commoditising steel is our plan and we are focused on having speciality and value added steel in our portfolio, which will create value and not just volume for the company,” says Jayant Acharya, director, commercial.

Along with JSW and Tata, state-owned Steel Authority of India, Rashtriya Ispat Nigam and the Naveen Jindal-led Jindal Steel & Power are the top integrated primary steel producers in the country.  

India's domestic production capacity was close to 138 mt at the end of 2017-18. The National Steel Policy of 2017 has set a target of 300 mt a year of capacity by 2030, indicating sizable scope for existing and new entities.