As the Indian economy exhibited steady growth in FY19 our country heldits ground as the second largest producer and consumer of stainless steel in the worldwith the domestic stainless steel industry growing faster than the GDP growth rate. I amhappy to share that Jindal Stainless Limited (JSL) maintained its leadership status in theIndian stainless steel industry and successfully steered the path for innovation. With apassionately progressive approach to business and through concerted efforts for increasingvolumes while maintaining an upward trend in quality your Company has set a strongfoundation to shape the future.
The demand for stainless steel is expected to grow at a consistent CAGRof 8-10% over the next five years. With the government's ambitious plans formodernising infrastructure the stainless steel industry received a huge fillip; majordemand drivers being sectors like Architecture Buildings and Construction (ABC)Automobiles Railways and Transport (ART) process industries like oil & gas andconsumer durables. Despite a strained external trade environment JSL continued to servethe growing domestic demand from the aforementioned sectors along with other importantapplications like pipes & tubes hollowware lift and levators food processing andspecialized and duplex grades of stainless steel.
Your Company is in the process of increasing the melting capacity from0.8 MT to 1.1 MT through debottlenecking and process balancing. The increase in capacitywill result in an annual production increase of 10-12% over the next 2 years. Themarketing initiatives of JSL will also be focused around booming segments like Pipe &Tube and efforts are underway to launch a co-branding scheme with the MoU customers inthis segment. This brand-building initiative will serve as a key differentiator for JSLand enable enhanced value creation in the supply chain. Your Company's sector-focusedapproach robust marketing and sales plans digitized and optimized productionefficiencies and heightened emphasis on customer service will catalyse unwavering growthin the future as well.
In the wake of newly emerging business challenges internalrestructuring has been done to sharpen the key focus areas for the future.
Going forward on the planning front a centralised team will serve asthe knowledge bank and think tank of the Company and will be responsible for the researchand rigour needed to find customised solutions for customers. Coming to the sales frontthe domestic sales team will make further concerted efforts for development of newstainless steel applications through conversion from other materials and development ofnew markets. Given stainless steel's resistance to corrosion even under extremeconditions high strength-to-weight ratio and lower lifecycle cost than other metals itis the perfect material to build the future-ready infrastructure of our country.
The stainless steel industry is deeply entangled in the dynamics of theglobal economy. This creates unique challenges for our country as India reels under thepressure of becoming a soft target with a high potential market for dumping of stainlesssteel products. Free Trade Agreements (FTAs) with countries like Korea and Japan and AFTA(agreement with ASEAN countries like Indonesia) encumber the growth of the domesticindustry due to trade imbalances arising from the onslaught of imports. Chinesemanufacturers are negating the effects of trade remedial measures imposed by ourgovernment like Anti-Dumping Duty (ADD) and Countervailing Duty on stainless steel flatproducts by re-routing their material through ASEAN countries.
The stainless steel industry also continues to bear the burden of highinput costs mainly due to an import custom duty of 2.5% on key raw materials likeFerro-Nickel and stainless steel scrap both of which are unavailable domestically. Giventhe contemporary protectionist sentiment across world economies we urge the government tomonitor the situation and act cautiously in order to safeguard the interests of thedomestic manufacturing sector. Abolishing the import duty on key raw materials imposingfurther protection measures like ADD along with increasing the import duty on stainlesssteel finished products at 12.5% are the need of the hour when other nations are guardingtheir own turfs. Active support from the government will not only provide a level playingfield to the domestic players and reduce India's trade deficit but also bring alive the'Make in India' vision further improving the job scenario in the domestic manufacturingsector.
Your Company is resolute on its commitment to uplift and supportcommunities and stakeholders through CSR endeavours in the areas of agricultureeducation women empowerment gender equality and health care. As we continue this journeyto create long-term value for every stakeholder I thank all shareholders board ofdirectors customers bankers investors and employees for reposing your trust in theCompany. I look forward to your valuable support in strengthening the steely resolve formany more years to come.
Chairman & Managing Director