Moneycontrol » News » Business » Business News

Steel prices not the major cause of inflation: Essar Grp

Published on Thu, May 08, 2008 at 14:17 | Source : CNBC-TV18

Updated at Thu, May 08, 2008 at 16:13

Like this story, share it with millions of investors on M3

Share on Tumblr

Excerpts from Markets Midday on CNBC-TV18 Watch the full show »

Nifty

BSE | NSE 10/02/12

Are Mutual Funds betting on Nifty?

J Mehra of Essar Group agrees with the government on its concern for rising inflation, although he does not believe that the steel prices are the major cause of inflation.

He said that the company's margins would suffer owing to the price cut. Mehra added that steel companies requested the government to cut down the prices of iron ore supplied by government owned companies as well.

Excerpts from CNBC-TV18's exclusive interview with J Mehra:

Q: If all factors were to remain the same and on account of these, steel price cuts we are seeing in flat products and in steel bars and rods what do you feel would be the margin impact on most of your large steel companies going in for these next quarter as this price reduction has happened for the next three months itself?

A.The price cut will certainly affect the margins. If one looks at the last quarter result of steel companies that do not own their own resources like coal and iron ore, they have posted results which are less than what they have been posting before the price rise which occurred in the last six months. Obviously this will further aggravate and have an impact on their bottom lines.

Q: Three companies came up with statements that they are going to cut prices, you also are following in?

A: We appreciate the government's concerns on the rising inflation. Though the steel has a very limited effect on it, as a good corporate we have agreed to reduce the price by Rs 4,000/tonne on the flat products.

Q: The roll back of export duty also therefore is confirmed?

A: We have made a submission to the government justifying why the prices have increased, there were very valid grounds for increasing the price. The government promised that they would consider all the issues that have been raised by the steel companies including, not implementing of export duty.

Q: From all the demands you have placed to the government, the rollback in export duty, cut back its freight charges, the linkages to Coal India as well as that ad valorem duty on iron ore exports, which sort of the demand will be the most dear to the steel industry and which will benefit you all the most?

A: The steel producers as well as the government came to an agreement that these measures would only be temporarily implemented. In the long-term structural corrections, need to be done in order to improve the supply line for which the steel companies have requested the government to give