The reference price of steel needs to be revised in line with international prices and cost of production to stop dumping into India says, Joint MD & Group CFO Seshagiri Rao of JSW Steel.
Speaking to CNBC-TV18, Rao said December imports of steel went up by 33 percent and that excess steel supply in the global market has not abated.
The company will spend Rs 4,300 crore in capex in FY18, Rao said.
Below is the verbatim transcript of Sheshagiri Rao's interview to Anshu Sharma on CNBC-TV18.
Q: What do you think about minimum import price (MIP), extension of anti-dumping duty and what is your outlook on prices going ahead?
A: MIP and anti-dumping, which has been imposed by the government -- I am very thankful to them -- has come at the right time so that had an impact. The total imports have come down by 37.5 percent but subsequently the international steel prices went up, the cost of production has gone up. So our fear when MIP is no more applicable for any of the steel products, even though there are safeguard and anti-dumping duty, the reference prices which have been taken earlier was based on then prevailing steel prices and the cost of production. Both are changed now. Therefore, there is a need in order to arrest the likely daunting of steel into India, these prices are required to be revised that is what we are looking to the government.
Why we are so keen that the prices are to be relooked is internationally the global situation of the access of steel supply is not abated. China, last year also has exported more than 109 million tonne slightly lower than the previous year but all the four countries which are export dependent countries, Russia, China, Japan and Korea -- so there is no reduction net if you see FY15 versus FY16, so global oversupply situation remained. So in that context if there is no preference price revision, the imports are likely to go up, which we had seen in a month of December. Imports went up by almost 33 percent, which were annualised at 10 million tonne. So there is a very urgent need that the reference prices are hiked in line with international prices and the cost of production.
Q: The financial year is about to end, what will be the capex meant for the next financial year for JSW Steel?
A: In this year, we will be spending Rs 4,300 crore capex so more or less our capex programme was getting completed except a carry over of Rs 2,700 crore for next year.
Now we are evaluating what is the next phase of growth, so we will finalise in the next few months. So in the month of May when we announce our quarterly results for this quarter, we will be able to give a clear and certain guidance about a capex for the next year.
Q: For over a year now JSW Steel has been looking out to buy a lot of steel plants. One of them is Italy proposition of Liva, we understand that Sajjan Jindal is in Italy and the deal is about to be finalised in the first week of March, so where does it stand, what bid has JSW put in?
A: It is not our individual basis, it is consortium where we are part of the consortium. Therefore, it is only the bidding which is to be done, so consortium will take a call about bidding if so it is done. The bidding date is March 3, so we will not be able to give more than that. It is confidentiality agreement which we are bound by it.