National Policy On Stainless Steel Must Address Raw Material Concerns: Abhyuday Jindal
How is an integrated approach towards policymaking hurting the stainless-steel industry?The stainless steel industry has been at the receiving end of an integrated policy framework approach for the steel sector. When we talk about stainless steel, we are talking about low volume and high value products, unlike steel, and hence, stainless steel needs a dedicated focus. The industry has unique challenges and requirements that get brushed under the carpet in the overall steel framework because of an integrated approach.
The integrated policy framework may cause distortions in the market by favouring certain types of products or producers over others. The integrated policy framework may impose additional regulatory burdens or compliance costs on the stainless-steel industry, which are not relevant to it, such as regulations on recycling policies. These may affect the profitability, growth and innovation potential of the stainless-steel industry in the long run. Hence, we are waiting for the National Stainless Steel Policy to cater to the specific needs of our industry, factor in the variety of its applications and grades, besides bringing together the scattered players in order to grow the entire sector.
The government is formulating specific policies for the stainless-steel sector. What inputs we can expect from Jindal Stainless in these consultations?
As an industry leader, we take proactive interest in formulation and promulgation of conducive policies. Jindal Stainless has already given its inputs to the government. The ‘Stainless Steel Vision 2047’ document, created by CRISIL and the Indian Stainless Steel Development Association (ISSDA) last year, also had inputs from Jindal Stainless to chart the roadmap ahead. The national policy on stainless steel must address the raw material concerns of the industry. This includes facilitation of scrap availability in the country, and incentives to push production of ferro alloys domestically. Zero custom and import duties on raw materials which are not available in India, is also a must.
High cost of logistics in India, which is to the tune of 13 per cent of our GDP (compared to eight per cent in the rest of the world), tends to make our products uncompetitive in global markets. The government is well aware of this fact and has taken initiatives like PM Gati Shakti to bring down these costs. We need the stainless-steel policy to push these efforts. We need better ports, waterways, and mature infrastructure options for fast and cost-efficient transportation.
Another area that will do excellently with policy focus is that of skill development and research. Though companies like us are running our own initiatives to train fabricators and introduce courses on stainless steel in IITs and architecture colleges of India…there is a need for wider academy-industrial partnership. The policy should also provide for knowledge and skill transfer to the MSME sector, which will not be able to do all this without government support. Since the stainless-steel industry has been grappling with cheap imports from China and Indonesia, we hope the policy will create a framework to check these imbalances on a regular basis.
Countries all over the world have blocked China from dumping into their markets. India remains an exception. A pro-growth policy, in my view, should create an institutionalised system to examine imports on a regular basis. And wherever it gets proven with data, that trade is happening on a lopsided basis, the policy should have a built-in auto-cut mechanism. It’s only through strict monitoring that Indian manufacturers can be saved from the bulldozing practices of Chinese, if we are to be spared the fate of the toy and electronics industries which got wiped out by Chinese dominance.
What are your expectations from the government in curbing these imports? What more can the government do?
From FY2021 to FY2023, imports from China and Indonesia witnessed a steep increase of 318 per cent and 158 per cent, respectively. This predatory approach not only undermines the principles of fair competition but also poses a considerable menace to the global stainless steel industry's sustainability. After a detailed sunset review (SSR) investigation under these challenging circumstances, the Directorate General of Trade Remedies (DGTR) has recommended continuation of the 18.95 per cent Countervailing Duty (CVD) on 200 Series of stainless-steel flat products from China.
We are hopeful that the government will take steps to reintroduce CVD on Chinese stainless-steel products in order to ensure a level-playing field in the industry.
Jindal Stainless posted a healthy set of numbers in Q1 – a nearly 50 per cent rise in PAT and 25 per cent in revenue. How was this achieved?
For Jindal Stainless, sales volume grew across diverse segments backed by a healthy growth in the domestic market and the government push on infrastructure. Increasing pre-festive season demand in consumer segments contributed to the sales volume. Coupled with an agile supply chain and a diverse product portfolio, the company was able to capitalize on the developing market situation throughout the quarter.
There has also been reasonable growth in sectors such as automotive and railways in the domestic market. In the railways sector, for instance, this growth has been propelled by ambitious initiatives supported by the Vande Bharat programme. There is a strong demand for wagons as well as for metro and urban rail transit projects. The PM Gati Shakti project is also gaining momentum. This project is also anticipated to generate additional demand for ongoing and upcoming projects like airports, heliports, cargo terminals, station development, and freight corridors. Furthermore, there is demand from emerging sectors like ethanol blending, renewable energy, and process industries such as thermal power plants and refineries, all of which rely on stainless steel consumption.
What is the volume guidance you are looking at for this fiscal?
Despite macro-economic challenges in the global markets, weak demand and pricing pressure in the EU and other regions, we are still maintaining our volume guidance. We are expecting a ~20%+ volume growth in FY 24 over FY 23 i.e., about 2.1MT. The EBITDA/tonne guidance for FY24 is in the range of INR 19,000-21,000.
Are synergies expected with the JUSL acquisition?
Jindal Stainless recently acquired the remaining 74% stake in JUSL for INR 958 crore, making it a wholly owned subsidiary of JSL. This acquisition would, indeed, result in improved synergies between both companies and a preferred governance structure, thereby enhancing value for all stakeholders. Given the strong outlook on stainless steel and the association of JUSL and JSL, the Board of Directors of JSL decided to consolidate all the critical facilities of stainless steel manufacturing under one umbrella.
What is your outlook on the various market sectors you are present in?
Jindal Stainless has a diversified clientele across various market sectors, such as automotive, railways, defence, architecture, building and construction, kitchenware, and consumer durables. The outlook for these sectors is directly correlated to the outlook of Indian economy. Our growth mathematics is therefore quite simple. When India grows, we grow. Though that’s also the reason why Chinese players are eyeing India, I am confident that Indian government will not let its growth momentum be encashed by foreign players, and that too, at the expense of Indian manufacturing.
The government’s push towards infrastructure, including the budgetary allocation of INR 10,000 crore, will further drive growth in this sector and the industry at large. We are pinning our hopes on favourable government policies viz. the Production Linked Incentive (PLI) 2.0 as well as the National Stainless Steel Policy, currently in the pipeline. CRISIL projects Indian stainless steel consumption to reach 12.7 MT by 2040 and 20 MT by 2047. This consumption, in FY23, was ~4MT. My outlook on stainless steel, therefore, is absolutely positive and I’m excited to be a part of it.
