Jindal Strips Ltd, the O P Jindal group company, has received a Rs 300 crore export order from the US even as the threat of anti-dumping action by the US looms large over the domestic steel industry.
"This is the single-largest export order bagged by an Indian steel company," N C Mathur, director (corporate & international marketing), said.
The US-based North American Stainless has placed an order for 55,000 tonne of stainless steel slabs of AISI 304 grade with 8 per cent nickel and 18 per cent chromium with the company.
Beginning this month, the order will be executed by March 2002. The first consignment of 7,000 tonne is being shipped out of Mumbai this week. According to Mathur, the remaining order will be executed in four lots of 12,000 tonne each.
As the entire order is being shipped during the current financial year, it will add Rs 300 crore to the company's annual turnover. It is also expected to improve the bottomline of the company, which has come under strain during the first half of the financial year. Jindal Strips' first half (H1) net profit fell 29.18 per cent from Rs 33.10 crore in 2000-01 to Rs 23.44 crore in 2001-02, while H1 sales fell 15.67 per cent from Rs 656.76 during 2000-01 to Rs 553.82 crore in 2001-02.
Thanks to the order, the company hopes to export at least 75,000 tonne of stainless steel this year compared to 22,500 tonne last year. Exports are likely to account for 25 per cent of Jindal Strips' turnover this financial year, up from 10 per cent last year.
Stainless steel slab was one of the 33 items considered for investigation under Section 201 by the International Trade Commission of the US. But it was dropped at the initial hearing itself from any further investigations as there was no proof of injury to the US steel industry.
According to Mathur, the order is hedged against fluctuations in the cost of nickel thanks to the inclusion of an alloy surcharge in the supply agreement. "As the payments are in dollars, we are also safe against any fluctuations in the exchange rate," Mathur said. The financing of the exports is also fully tied up.
To accommodate exports of 55,000 tonne of steel slab (Jindal Strips' capacity is 350,000 tonne per annum), the company is diverting production from lower-end products such as utensils. As per Mathur, the order has established that Jindal Strips can supply adequate stainless steel slab to the Salem Steel Plant of the Steel Authority of India Ltd for which it has bid.
North American has the capacity to produce 1 million tonne of HR coils and 350,000 tonne of CR coils. A subsidiary of Acerinox of Spain, the company is putting up a melting shop to produce its own slabs. "Though we might not get repeat orders from North American Stainless, the order establishes that we can supply high quality stainless steel," Mathur said.
