Jindal Stainless (Hisar) says sector needs help on imports

The company says rising import and higher raw material cost would put pressure on industry margins

Jindal Stainless (Hisar), part of the OP Jindal Group, has had robust quarterly profits during 2016 but says rising import and higher raw material cost, especially of nickel and chrome, would put pressure on industry margins.

Its crude steel capacity of 1.8 million tonnes per annum (mtpa), with annual turnover of Rs 14,500 crore. The Hisar factory is one of the biggest for stainless steel in the county, with a fourth of the 3.2 mtpa national capacity. The unit is also the world’s largest producer of stainless steel strips for razor blades and India’s largest producer of coin blanks for mints.

Stainless steel has been traditionally used for utensils in India. The company is now looking at the railway and construction sectors as potential customers. Stainless steel is used in the Shatabdi and Rajdhani trains; the industry has asked for extending the use to other trains.

During the quarter ended September 2016, Jindal Stainless (Hisar) had a net profit of Rs 53 crore, primarily due to increased operating margins and reduced interest cost and depreciation. It intends to invest another Rs 150 crore in capacity expansion.

Globally, the stainless steel segment has seen lower growth in developed markets. China has excess capacity and faces anti-dumping measures. “Once their (China) other markets are closed, they divert their goods that are cheap and are of inferior quality to other markets, including India,” complained Ashok Gupta, finance director of Jindal Stainless (Hisar).

Also, as mentioned earlier, prices of nickel and chrome are on a steady rise. “Unlike China, India is not a producer of nickel. Indian stainless steel makers face a duty on import of raw material, a double disadvantage,” Gupta said. He asked for the duty’s removal. The industry wants protection against imports. Gupta said he’d like anti-dumping duty and a rise in the basic customs duty to 12.5 per cent. Subsidies by the Chinese government to its industry should be compensated by way of a countervailing duty.