Moneycontrol PRO
you are here: HomeNewsBusiness

Interview | India needs zero rail imports, domestic players can meet demand: JSPL MD VR Sharma

Steel demand is rising because of exports and several domestic sectors including water pipelines, refineries, railways, shipbuilding, boiler industry, cryogenic tank building and oxygen plants, the MD of JSPL said.

June 28, 2021 / 05:37 PM IST

Private sector steel major Jindal Steel and Power Ltd (JSPL) is expecting a 7 percent rise in its production during the current financial year despite the pandemic, and aims to reduce its debt of Rs 19,000 crore to below Rs 10,000 crore, its Manging Director V R Sharma said.

In an exclusive interview with Moneycontrol, he also said the country does not need to import rail as JSPL, along with state-run SAIL, would be able to meet the entire demand of the country at a lower price than foreign suppliers. Edited Excerpts:

In the fourth quarter, you had registered good numbers and there was around 37 per cent increase in your production. Did the second wave affect you in April and May?

In April-May things were down, but we will touch 2 million tonnes (MT) of production by the end of the quarter and by the end of June. So 2 MT if we are able to clock in four quarters, then we will touch 8 MT in 2021-22, whereas last year (2020-21) our production was 7.5 MT. We will be very positive in terms of growth.

Which are the sectors that are driving this rise in demand?

Close

Export is the largest demand and the second-largest is the steel infrastructure companies, that means companies other than building construction. So, infra companies like water pipelines, refineries, railways, shipbuilding, boiler industry, cryogenic tank building, oxygen plants that are coming in a big way in the country are pulling the demand

Definitely, compared to last June this year June is much better. At least we will be registering more than 15 per cent growth on June-to-June growth.

From having a debt of around Rs 50,000 crore in 2017, you have significantly reduced borrowings. What is your strategy going ahead?

During the end of the last financial year, our debt was down to Rs 19,000 crore. We will bring it down to four figures by the end of this financial year -- our plan is to reduce another Rs 10,000 crore.

Our slogan for the year is 15:15:50 -- that is more than Rs 15,000 crore of EBITDA during this financial year, debt below Rs 15,000 crore though we are confident enough to bring it to below Rs 10,000 crore and a sales turnover of Rs 50,000 crore.

What is your strategy for the rail sector?

For railways, we have a good plan in place. We have developed special 1080 grade rails for the metro rails. Metro rails are consuming more than 25,000 tonnes of rails per month in India. There are so many metro projects coming in the country, driven by the Ministry of Urban Development and Housing. With the support of the Centre and the state governments, it comes as a joint project.

So far, this product of 1080 was being imported into the country. Our major aim was this rising number of metro projects when we put up our 1080 grade head hardened rails. That is quite successful now. Earlier, we were getting 20 percent of the total order as developmental order, but now we have started getting 100 percent order. Very recently, Ircon has given us a 100 percent order of 5,000 tonnes and now Mumbai metro also, I think we will get the full order. Similarly, Chennai, Bengaluru, Lucknow, Kolkata, Jaipur and all these metros are now banking upon JSPL sales and we are successfully supplying them.

The demand by the Indian Railways is around 1.5 MT and they had floated global tenders too last year. Do we require imports?

Last year, the railways consumed only around 800,000 tonnes. During the current year, they may consume around 1 MT. They had a plan to use 1.7 MT this year. However, because of Covid, around 17,000 rakes were parked in different stations. So, there was no use of the track, which means there is no point in replacing the track also.

At the beginning of April last year, after the lockdown was declared, in a few of the segments they had one year of life available for tracks to be replaced. So that one year life increased now because the trains were not running on the railway tracks and they got time to do the maintenance. This is the reason why they could not use the rails fully. From next year onwards, they will be using more.

Regarding import of rails, I believe that we need zero imports. The domestic production itself -- SAIL and JSPL together -- can give 2 MT. SAIL will be able to supply around 1.3 MT and the rest we will be able to provide. There is no point importing as our rails are cheaper than the imported ones and the prime minister has already declared an Aatma Nirbhar Bharat. I think domestic supply of rails will not be a problem in India.

Are you overdependent on any particular sector like the Railways?

Our mill is a combination mill. Even if they don't buy even 1 kg of rail, our mill will be running. The mill is capable of making multiple products -- there are seven products that we can make out of this. That flexibility is an added advantage for us. And that's why we have been running for the last 25 years.

You were supplying liquid medical oxygen from the month of April during the second wave. What is the demand as of now?

Initially, we supplied oxygen everywhere in the country but after a few days, we were told by the government that now you feed Telangana, Andhra Pradesh and Tamil Nadu and Karnataka partly. So we were supplying them after that. So far we have supplied more than 3,500 tonnes. We had the option to supply more than 500 tonnes per day but there were no tankers available. For the last 25 days, nobody has taken anything. We are waiting, if anybody wants they can take oxygen from us.
Shine Jacob
first published: Jun 28, 2021 05:36 pm
Sections
ISO 27001 - BSI Assurance Mark