Domestic market enough to take in our capacity: Jindal Stainless MD

Jindal says that the strategy is to focus on the domestic market

Abhyuday Jindal, managing director (MD), Jindal Stainless, in an interview with Ishita Ayan Dutt in Kolkata, says the company’s strategy is to focus on the domestic market as weak international markets coupled with the Red Sea conflict has been impacting exports. Edited excerpts:

 

The UK and Japan have officially slipped into recession. How do you see it impacting exports, which have been battling weak demand in international markets?

Exports have not recovered in the last one year. We had hoped for some recovery this quarter but Europe is still impacted because of the two wars that are happening. But the domestic market is very good because of government spending and it is sufficient for us to absorb all our capacity. We had said we will export 15 per cent of our total output. But it will be more like 10-12 per cent now. We are exporting to the US, South America, Middle East, but Europe is still subdued.

 

Do you see a pickup in Europe in the near term?

Not immediately, definitely not in the next two quarters. Especially with the Red Sea issue, freight cost and time to Europe has gone up. So, it has become a bit of an issue from a cost perspective. So, we want to focus on the domestic market.

What is the cost impact of the Red Sea conflict?

The Red Sea was the main route that the ships used to travel between Asia and Europe. It is now going via Cape Town. That is taking 30 days more, adding to the cost. The freight cost, depending on the destination, has severely gone up, ranging from $100 to $500. That impact is heavy, which is tough for us and the customer.

How is the transitional phase for Carbon Border Adjustment Mechanism (CBAM) panning out?

As a company, we are totally ready. We had kept ourselves ready — the reporting has started, we have already signed up with the accreditation agencies. But I feel that there is a lot more information required that’s still to come out from the EU. And, our government is saying that it is taking it up because it’s going to impact all the players. We are already investing a lot into renewable energy and our pilot green hydrogen plant in Hisar has started. So, our transition towards green energy is very clear. But how CBAM is going to play out, in the next two years, needs more clarity.

So far, weak exports have been compensated by strong domestic demand. But do you see demand slowing down in the near term with the elections coming up?

I don’t see that at all. I think the government is spending in the right areas. I think the next 10-15 years is the time for infrastructure. And, stainless steel goes everywhere in infrastructure — airports and railway stations.

A huge budget for railways has been announced — all your coaches are made of stainless steel and more and more wagons are being converted into stainless steel. This is because they have fuel efficiency, are lighter, carry more material and are corrosion free. So, that switch is being made more to stainless steel. The Prime Minister’s Gati Shakti programme is something that I am personally looking forward to because that will drastically bring our logistics cost down. So, we see good domestic demand even in the near term. All the industries are investing again, process industries are investing and stainless steel is being used in new-age applications like renewable energy, desalination plants, LNG terminals and ethanol plants. All the areas where you see good growth, stainless steel is present. So, domestic demand is robust with support from the government and the private industry.

You were looking for some kind of relief from imports. But it didn’t happen in the interim Budget. Are you going to make a fresh pitch?

That dialogue with the government will always be on because almost 35 per cent of the domestic market is taken over by imports from China. We have close to 45 per cent market share, 30-35 per cent is with China and the balance is split among all the Indian producers. So it’s actually hurting all of us. In the last 4-5 years, there has been practically no protection. We have made our processes more efficient, improved our buying and sales techniques, to protect our margins. But that dialogue with the government is required and we are going to continue to keep doing that.

You have just completed doubling capacity to 2.9 mt-3mt. When do you think you can take up the next leg of expansion?

I think the melt capacity is sufficient for the next few years. We would look to increase our cold rolling capacity and focus towards some downstream assets. A few months back, we acquired Rabirun in Kharagpur (West Bengal). It is more of a downstream cold rolling play. So, we are going to invest in the cold rolling side, which will give us more margins and applications will increase.