The year gone by marked the beginning of a new chapter for Jindal Stainless Limited (JSL), with special emphasis on sustainable growth and ambitious initiatives for a stronger institution hereon. I convey my gratitude to all our stakeholders who have been a partner in JSL’s progress, including our employees for their commitment and conviction. We hope to create value through profitable growth in future too.
Stainless steel industry is growing annually at 5-6% for over two decades and this growth trajectory is expected to be maintained in the next few years as well. Automobile, Railway & Transport (ART) and Architecture, Building & Construction (ABC) sectors have contributed significantly in increasing our domestic stainless steel usage and will continue to generate healthy demand in the future as well. To feed the growing demand of our developing economy, we are targeting to scale up our stainless steel melting capacity through debottlenecking and process balancing.
Our Company continues to focus on cost control measures, improving asset utilisation, reducing debt levels and increasing productivity. JSL’s strategic focus areas are retention of market leadership in our core product categories and building technical capabilities in response to the market dynamics. Besides this, we aim to leverage advancement in technology and innovation to enhance our competitive advantages.
Our R&D capabilities have enabled us to foray into new age applications of stainless steel. JSL will now also cater to marine, commercial transport and elevator segments in addition to the existing portfolio. I am also happy to share that our stainless steel products are now certified by Japanese Industrial Standard (JIS). This certification will enable us to market our products in Japan and East-Asian Countries as well.
However, owing to volatility and increased protectionism in the global economy, we may face some challenges in the short-term.
Safeguard action by EU and imposition of Section 232 by USA will result in diversion of trade flows to the Indian subcontinent. It is high time that the Indian government also took such bold measures to protect the interests of local manufacturers.
Although the government has imposed Countervailing Duty (CVD) on stainless steel imports from China, the duty is being circumvented with imports now routed through Free-Trade Agreement (FTA) ASEAN countries like Indonesia and Vietnam. This is creating huge trade imbalances for domestic players and widening India’s trade deficit with these countries. Nations like China, Japan and Korea are riddled with excess capacities, resulting in surplus production which is dumped in growing markets like India. Further, their FTAs with Indonesia have only added to the problem. The ongoing Regional Comprehensive Economic Partnership (RCEP) negotiations, which envisage tariff-free imports, will further enable dumping of their excess capacities in India. In view of the aforementioned developments, it is imperative that the government reviews all the existing FTAs and keeps stainless steel out of the purview of any tariff concessions proposed under RCEP.
The Indian stainless steel industry also struggles with 2.5% import duty on ferro-nickel and stainless steel scrap, both of which are not available domestically. Further reducing the competetiveness of domestic players is the low Basic Custom Duty (BCD) imposed on stainless steel goods at only 7.5%, as opposed to the corresponding figure for carbon steel at 12.5%. This combination of import duties on raw materials and low levels of protection in terms of BCD places the domestic industry at a strategic disadvantage. This problem is further compounded by the inverted duty structure brought about by the FTAs signed with Japan and Korea. There is a compelling need to enforce corrective measures in the aforementioned areas to provide a much needed level playing field to the domestic players and enable them to compete on even terms with the rest of the world.
It is vital for businesses today to re-imagine their role in the society. At JSL, we strongly believe that a company can thrive only on the foundation of sustainable development. Therefore, sustainability and environment consciousness remain at the heart of our Company’s operating strategy. The tradition of caring for our communities and stakeholders through Corporate Social Responsibility programmes was intensified during 2017-18 through promotion of education, women empowerment and gender equality and several health care initiatives. I am also delighted to share that our rigorous efforts have helped us strengthen our balance sheet and we will exit the Corporate Debt Restructuring scheme soon.
I extend my heartfelt gratitude to all our stakeholders for their generous support. I am thankful to all our trusted business partners, esteemed customers, faithful shareholders, reliable bankers, experienced board members, and our passionate and committed employees for their unwavering trust and confidence in the company. I look forward to your continued support in future and hope that we achieve many more milestones together.
Chairman & Managing Director