Minimum import price benefits Essar, Tata Steel

Essar Steel's ramp-up has led to improvement in EBITDA margins to 20% from 5% earlier

Imposition of a minimum import price (MIP) on steel products since February has started to benefit domestic companies. Essar Steel and Tata Steel have recorded significant production growth in flat and value-added products in the quarter ended March.

Essar said its production of flat steel products, used by the automobile industry, rose 48 per cent from a year ago, at 1.22 million tonnes in the quarter. Re-painted galvanised iron production was the highest in a quarter at 78,000 tonnes, up 55 per cent from the same period last year, it said.  

With MIP imposition, Chinese imports of steel at 'predatory prices' has been contained, leading to better sales realisation in the Indian market, said Essar.

Adding: “Ramp-up in production volumes since March has led to significant growth in the company’s Ebitda (earnings before interest, taxes, depreciation and amortisation) margin and a marked improvement in the debt-equity ratio. The Ebitda margin has increased from five to around 20 per cent, an improvement to Rs 6,000-7,000 a tonne.”

Tata Steel said it recorded its best-ever sales to the automotive sector at 379,000 tonnes in the quarter, from 334,000 tonnes in the corresponding period a year before.

Total provisional saleable production in the period was 2.35 million tonnes, up nearly six per cent. High-end steel sales volume, of value-added products, was 76,000 tonnes, up eight per cent.

Domestic companies had been facing the brunt of cheap imports from China for quite some time until February, when the government placed an MIP on 173 steel products.

The measures taken are bearing fruit.