‘Demand for steel is directly proportional to infrastructure projects’

Indian Steel Corporation Ltd (ISC) is a leading company offering solutions for quality cold rolled steel and coated steel products. ISC is jointly promoted by Ruchi Group of Industries, India and Mitsui & Co. Japan. The primary focus of ISC is to produce quality steel products concentrating on the auto, construction, home appliances and general engineering segments.

Arjun Zalani, Executive Director – Indian Steel Corporation Ltd told Sandeep Menezes that due to rupee depreciation Indian domestic integrated steel players got advantage on pricing of iron ore vis-à-vis competitors abroad.

Excerpts from the interview:

India has traditionally exported only a miniscule portion of its 78 million tonne (mt) annual steel production. But a weaker rupee is making Indian steel products more competitive in the global market. Comment.

It is true that Indian steel exports in global market are very miniscule. There are number of factors attached to the same. For example, in past years, steel demand in India was good compared to demand in global markets and most of the domestic steel companies as well as foreign companies were concentrating in Indian domestic market. However in last couple of years, due to economic slowdown in India, demand of steel and margins in domestic market is very sluggish, prompting Indian companies to look beyond Indian shores to sell their products for better capacity utilization. Therefore, assuming that weaker rupee is only responsible for making Indian Steel products more competitive in international market is not true.

The weak Indian currency has also raised the cost of importing coking coal for steel companies. Comment.

Yes, the weak Indian currency has raised the cost of imported coking coal, but at the same time, Indian domestic integrated steel players got advantage on pricing of iron ore compared to its peers abroad, since the same is available at almost half the cost due to depreciation of rupee compared with international market price of iron ore. Regarding convertors, like us, impact is due to increase of our raw material prices of hot rolled coil and its volatility.

Due to rising input costs, there have been demands for raising prices for cold rolled steel and other products?

Rising input costs are definitely putting a lot of pressure on bottom lines of convertors. Also due to increased competition from integrated steel producers, sluggish demand, high interest cost and low liquidity is preventing us to pass on the cost to customers.

How will the government’s thrust on infrastructure development boost demand for galvanized steel products?

Steel is a basic industry and demand of the same is directly proportional to the infrastructure developmental projects. Regarding galvanized steel in India – the major factors determining the demand are infrastructure projects like industry, power projects, airports, stadiums, housing as well as rural economy.

What is ISC’s future business strategy?

We plan to double our steel rolling capacity from 600,000 tonnes to 1.2 million tonnes in near future.

Going forward, does ISC intend to increase focus on any existing products or enter new segments?

Colour coated steel products will remain our focus in the near future.