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JSPL is in a good position to capitalise on infra growth – Mr Naushad A Ansari

Steel News - Published on Thu, 19 Apr 2018

Image Source: steelguru.com
Talking to ETNow, Mr Naushad A Ansari CEO Steel Business, JSPL highlights the much needed focus on infrastructural development and how that would benefit the steel sector in general and the company in particular.

Q - Domestic steel production is closely linked to GDP growth, infrastructure and construction spending. Given that India’s GDP is already pegged to grow at least 7 per cent over FY19-20, what is it that you are expecting it to translate into for the steel industry in particular?
A - If one looks at the last few years the stee| demand is slump to show steely prospects actually lagging a little bit compared to the GDP growth. So: with with 7 per cent plus GDP growth expected, the steel demand would certainly go up by about 6-6.5 per cent. Historically as well, if one looks at China’s example: you would find that few years back, the steel demand was actually going up substantially more than the GDP growth. Therefore, we are hoping that as the infrastructure and the construction demand increases and the economic situation improves overall, there would be a time when the steel demand can actually outperform the GDP growth.

Q - Do you think pricing power is returning in the steel sector ?
A - For the last few months and quarters, the pricing has continued to go up. There was also a cost push because of the electrode and refractory etc; but of late, the prices of coking coal and iron ore are coming down. Also, there are expectations that margins may actually grow up, even though the costs might come down. Therefore overall, I think that the steel plants should be able to do better than what they have been doing in the past.

Q - What according to you is the reason for steel demand lagging GDP growth in India and do you think that with prices improving, that there would be a meaningful impact on demand ?
A - Lately, the focus on infrastructure development and as well as on the construction sector has enhanced. And therefore, the possibility that the steel demand will improve in relation to GDP growth is much more now. Also, with about 40 lakh crore investment projected for the next five years in infrastructural sector, it can actually translate in a very substantial demand increase for steel. So, earlier since the focus was a little less compared to what it is today, the steel demand was historically less than GDP growth but as we go forward, we do hope that the situation will improve now.

Q - Considering that the infrastructure capex in the country is slowly taking off. Do you think that triggers for the same are also programmed for roads and construction and that there is an emergence of new infrastructure sector as well. Have you seen a substantial pick up in the government orders?

A - Indeed, it is, especially in terms of railways (metro rails) and road infrastructure where we have seen a substantial increase in the orders. We are also very hopeful that the Indian Railway will soon finalise the orders for the new rail which they have to buy in addition to its buy from the Steel Authority. In other words, certainly we see that there is a lot of pickup in demand and with the kind of money these organisations now have, we expect that the orders will further accelerate.

Q - What is your government infra order book currently at and how do you see it increasing. Also, since about 75 per cent of your products are long products, do you believe that that gives you an edge over other steel manufacturers when it comes to catering to the pickup in demand back home on Indian shores?

A - Certainly. The big advantage which we have is that our basket is almost complete. Apart from hot rolled coil, we have the entire complete basket, be it rebar, wire rod, structural or rails. Hence, our company is in a very good situation to capitalise on the entire infrastructural growth.

Also, it is correct that 75 per cent of our products are long one. In fact, out of about 10.6 million-ton capacity , only about 2.2 is flat and the rest is all long. Therefore, the benefit which we can derive out of this is quite substantial and given our track record of meeting our commitments and the quality of the products that we deliver, we are hopeful that we will remain in a good situation for long time.

Q - You are the only private manufacturer for rails in India, you have a setup of about 0.75 million-ton plant which is dedicated to the same. What percentage of your volumes comes in from rail orders?
A - The plant which you talked about, can produce rail and also can produce heavy structures. However, in the current situation a substantial percentage i.e. about 60-65 per cent comes from heavy structures and the rest from rails especially the metro rails. Apart from that, we are also expecting a major order to come from Indian Railways.

Q - We understand SAIL had faced difficulty in supplying rails and you have also bid for rail supplies too but there has not been much progress on that front, is that especially a domain where you are looking at expanding your order book?
A - Along with us, there are many foreign bidders who have also quoted for these rails and I think that railways are in the process of verifying the credentials of all those foreign bidders. As far as are we are concerned, it has already been approved by RDSO. So as per the Railway process they will make sure that all the bidders have been fully analysed technically and they will come to a decision as to what is to be awarded to an Indian company. We are of course very hopeful, that once this process is complete we should really be looking for a large order coming from Indian Railways.

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Posted By : Nanda Koijam on Thu, 19 Apr 2018
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