Demand slows down, but Jindal Stainless continues on debt reduction path

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26 Aug, 2025 12:21

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Despite slowing demand from some of its major clients, Jindal Stainless hopes to continue on a debt-reduction cycle and cut its debt by another Rs 1,000 crore by March 2020.

The country's largest stainless steel maker has a consolidated debt of about Rs 7,500 crore.

"We are adjusting our capital expenditure according to the market condition. This will help us improve our debt-equity ratio, from the present 2.8:1 to 2.1:1 by March 2020," Managing Director Abhyuday Jindal told Moneycontrol. 

The company, which has facilities in Haryana and Odisha, gets most of its clients from the auto, railways, fabrication and kitchenware sectors.

"It was a bad Diwali for everyone. The sales from the auto sector have been poor for four to five months now," he said. But, demand has picked up in railways, fabrication and kitchenware sectors. Each of the sectors, he said, contributes 10-15 percent to Jindal Stainless' sales.

It doesn't help that the sector is ailed by overcapacity. While the total capacity is of five million tons, only about half of it is being utilised. While bigger players like Jindal Stainless, producing at full capacity, are better placed, it's the smaller manufacturers that suffer more.

"Many of the smaller manufacturers have shut shops, and have instead become traders, given the cheap imports," says Jindal.

Cheap imports

Imports have further made the conditions tougher for stainless steel players.

India imports about five lakh tons of stainless steel products a year, mostly from Japan and South Korea. As these countries have free trade agreements with India, imports from them come duty-free.

On the other hand, "we need to pay duty on ferro nickel, a raw material that we need but is not produced in India," said Jindal.

He said the present duty of 7.5 percent should be hiked to 12.5 - 15 percent to "protect the local industry." All the more, Jindal added, because Chinese companies have started selling in India, but through other countries where they have manufacturing presence. Chinese producers use the circumventing route to escape anti-dumping duties that India has imposed on their products.

Expansion plans

Jindal Stainless plans to expand its capacity to 2.4 million tons a year, from the current 1.6 million tons.

"We are slowing down according to the market conditions," said Jindal.

Conserving capital will be important for Jindal Stainless as it is coming out of a debt restructuring exercise that started in 2013. It aims to exit CDR by the end of this financial year.

The company also plans to set up a manufacturing hub in Odisha, that will also host other manufacturers. Jindal Stainless had acquired 300 acres for the purpose and plans to spend about Rs 200 crore in setting up the park.