Higher steel safeguard duty will hurt end users:Uttam Galva

The government's proposal to impose a higher safeguard duty on hot rolled coil (HRC) steel will hurt end users like Uttam Galva Steel, says the company's Deputy Managing Director, Ankit Miglani.Hot rolled coil is Uttam Galva's main raw material, Miglani says. "We are neutral to the situation because I have another listed company which produces hot-rolled coil to the same extent but overall it is negative for the industry because it will put a lot of pressure on downstream end-users," he tells CNBC-TV18.Uttam Galva has Rs 3750 crore of debt on its books. Miglani does not expect any increase in debt, but says the year ahead will be a "tough" one for the company.Below is the transcript of Ankit Miglani's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.Sonia: Uttam Galva imports hot-rolled coil (HRC) steel, correct. So with the higher safeguard duty now this imported steel will become more expensive for you which could be a negative?A: Yes absolutely. This is a very negative situation for us. Hot-rolled coil is my raw material in Uttam Galva Steel Ltd, so it makes our raw material very expensive and our finished products are not put into safeguard. Therefore, this is going to encourage people to import downstream products like cold rolled galvanised and pre-painted instead of brining in the hot-rolled coil.Latha: This is a recommendation yet, it is not yet imposed. Is it not possible that people like you could book more imports earlier before the duty comes in - and it is anyway for 200 days?A: Yes but at least during that period it is going to be a very negative impact. We have another company called Uttam Value Steel which produces hot-rolled coil, so it is beneficial for that entity but Uttam Galva Steel Ltd is in negative situation. Sonia: You have been sitting on a huge debt of almost Rs 3750 crore. Since the situation is only going from bad to worse, do you see debt piling up now and what could it be by the end of the year?A: I do not see a debt figure changing dramatically on a total debt situation. So far we have been able to maintain EBITDA levels to manage our situation, so I do not see a significant increase in debt but it is going to be a tough year ahead.Latha: You see stress ahead or you are categorised as a special mention account?A: No absolutely not. We are completely regular.Sonia: Can you give us the number as to what is the exact cost of landed imported steel versus domestic steel and post this 20 percent, how much will the landed steel prices go up?A: The imported steel with the new duty structure will be about Rs 1,000 more expensive than the current prevailing prices in the domestic market.Latha: Are you also prevailing upon the government not to impose the duty?A: We are neutral to the situation because as I said I have another listed company which produces hot-rolled coil to the same extent but overall it is negative for the industry because it will put a lot of pressure on downstream end-users creating not a level playing field for the end-users of the product.Sonia: Since your raw material prices or cost will go up, can you give us an expectation of what your operational performance could be in the next couple of quarters?A: Frankly it is a bit early to predict that because we do not know the implications of this duty on the downstream products and the supply demand situation. We would need few more weeks to revalue our business plan.