Indresh Batra, MD, Jindal Saw, said demand for their products remains robust. "But the challenge is to maintain margins. However, margin improvement would depend on coal and steel prices." 

According to Batra, nearly 100% of our raw material needs is imported and there is no clarity on whether there will be a duty exemption on imported steel.

Excerpts from CNBC-TV18’s exclusive interview with Indresh Batra:

Q: Take us through the outlook for the next quarter. Your operating margins were about 15% compared to 11%. Will you be able to maintain these margins and will you be able to improve from these levels?

A: As far as the outlook for the next quarter is concerned, the demand for our products remains robust. The challenge would be to keep the margins. The next quarter should be a reflection of the margins of about 15.5-16% that we had in the last quarter. But improvement on it would depend on what the coal and steel prices are.

Q: Where does Jindal Saw stand, in terms of the export duty notification? Will you also be forced to pay a duty on your exports? What is the percentage of exports in your total product composition?

A: We manufacture three products: one is our hydrocarbon transportation business, which contributes close to 65% of our business and 80% of that comes out of exports.

The second business for us is seamless pipes, which are used in oil and gas filling. Nearly, 20% of that comes out of exports. Third is ductile iron, which is used for water and sewage transportation and nearly 100% of that is domestic.

We read the notification and it covers us as well. What is probably not clear as yet is that we import steel, because the kind of steel that the hydrocarbon and transportation businesses use is not manufactured in the country. So, nearly 100% of our raw material is imported and then we manufacture and export it out. The question is whether it would be taxable or not.

Our sense is that imported steel, which is in turn exported, should be exempt from that. But we continue to wait for more clarification on it.

Q: Will you be able to pass on the duty hike? Will the market be able to stomach it?

A: Contracts do have a cost pass through clause. Given the fact that it is a government notification, which we couldn’t have factored-in earlier, to a very large extent we should be able to pass this out.