Steel cos cut prices by Rs 4,000/tn

Anil Jain, VP-Finance, Maharashtra Seamless said they've asked for a reconsideration of the issue because they are not steel producers, but are actually steel users.

They are targeting around 15-20% growth, both in terms of topline as well as bottomline.

Excerpts from CNBC-TV18's exclusive interview with Anil Jain:

Q: The government has asked steel producers to reduce steel prices to about Rs 4,000 per ton, recently they even imposed a 10% export duty on steel pipe manufacturers like yourself, so are you expecting any further developments or are you in discussions with the government firstly on this export duty front and on the other fronts where you expect to increase some sort of an export duty?

A: We are still awaiting the final notification from the government because that is yet to be approved. There has been a speech to that effect, where they have included the pipe and tubes, where in feel that perhaps seamless pipe which is under a different chapter, may not be included. But we have taken up through the various chambers of commerce through the government about the reconsideration of that issue, because we are not steel producers, we are actually steel users.

Q: If they do go ahead with this 10% export duty hike, do you feel you will be able to transfer the pricing and will it effect your realization significantly?

A: What we are thinking at the moment is there has been a cut also on the import duty on the billet side, which is our raw material, it would get neutralized to some extent and the balance we will be able to pass it on to our customers.

Q: Given the way steel prices have been moving and the news has just come in that government has asked steel companies to cut prices by Rs 4,000 per ton, how much of that would mean relief for you since you are a user of steel?

A: What we are noticing at the moment is of late there has not been any input price hike from our vendor side. But we are still to see whether they will finally reduce steel prices further because we are a user of steel. So, we are yet to see the impact of that.

Q: Going forward for FY08 given the kind of performance we have seen so far, which has been disappointing on the PAT as well as sales, what is the target you are laying out for FY09?

A: We are targeting around 15-20% growth, both in terms of topline as well as bottomline.

Q: And margins would stay around 19.5% or would trend lower?

A: We expect in terms of percentage might show some decline in numbers as a rule of percentage because if the prices of steel go up, we also in turn increase the price, because we are maintaining on a profit per tonne basis.

Q: So, you would keep margins at 19.5% or would you see more pressure?

A: We would try to maintain the margin at that same level.