Need different tariffs to combat steel imports: JSW Steel

Seshagiri Rao,  Joint Managing Director and Group CFO, JSW Steel of JSW Steel speaking about the outlook for the steel market going forward said even after the imposition of state guard duty, imports haven’t fallen, adding that in fact imports grew by around 42 percent this fiscal.In order to avoid the safe guard duty, the Chinese are under pricing the products, so there has been no relief for the domestic steel producers as such.There is need to introduce different tariffs across the supply chain to combat the problem of imports into India, he said.Below is the verbatim transcript of Seshagiri Rao's interview with Anuj Singhal and Ekta Batra on CNBC-TV18.Ekta: Tell us how the situation is post the safeguard duty that came in, what is the situation with regards to imports right now in the country and any respite felt in the past couple of months?A: In this financial year, if you see inputs have grown by 42 percent. Even after safeguard duty imports continue to come in. They are increasing, they are coming at any predatory pricing. So that is a cause of concern. After the safeguard duty has increased, in fact internationally the Chinese have reduced the prices further. So they are exporting it at any price to India. So the industry is very much concerned about it.Not only hot rolled coil, it is very essential that even in other products like cold roll, galvanising, colour coated these are the products that are coming in. Also the HR coil where the duty is applicable, they are finding different ways of bringing the same product into India to avoid the safeguard duty. For instance, HR Coil -- they are saying it is a structural application but bringing an alloy steel where the safeguard duty is not applicable. Similarly, the cold rolled full hard material, that is also coming into the market.Also what is astonishing is that some of the Indian players are bringing in at significantly lower prices in order to avoid the safeguard duty. So these are different ways which we are seeing in the market place. We are not seeing big relief for the steel sector even after imposition of the safeguard duties.Anuj: What is the solution then because if we keep raising duties and if they keep finding the way to dump the product as you are saying then what is the solution according to you?A: Across the supply chain they have to introduce a different tariff measures like either safeguard or countervailing or anti-dumping or non-tariff barriers like quality restrictions. This has been across the world, it is not specific to India because China is very structurally surplus, they are not reducing the production, their consumption, their demand in fact has fallen over by 8 percent in the month of October. So there is a huge amount of fall in the demand. When the production is not falling, they have to look at new markets. So they are exporting to every place. That is why there is a need for Indian government to look at the structural issue and the way it is coming at a very low prices and it is very uneconomical and unfair and also the predatory pricing, which is being done for the steel sector.Ekta: Fundamentally for your company, how do things stand for example on the balance sheet can we see some respite possibly in the second half of this fiscal in terms of interest costs?A: Because of the unique business model, which JSW Steel has, it is one of the profit making companies instead of challenges, which I just explained because we have kept our balance sheet and our financials quite robust and strong. That is why we are able to pass through this problem. Also, we have a very good product mix and we have control on the cost and also access to the markets. These are the three unique strengths which JSW Steel has due to which we are able to be above the water right now.Anuj: Talking about your own company what is the debt situation and anything you are doing about that in terms of some fresh moves?A: In fact our gross debt in this year has not gone up. We were at Rs 40,000 crore, even now it is Rs 40,000 crore. Our net debt as on September 30 was Rs 39,008 crore so we would like to maintain a gross debt level of around Rs 40,000 crore. At the same time what is very important to note is that we are expanding our capacity from 14 million tonne to 18 million tonne. Four million tonne extra capacity is coming in by end of this quarter without increasing the gross debt of the company. So the incremental capacity will add lot of value to the company and also to the bottomline going forward.