Vikram Amin, Executive Director, Strategy & Business Development, Essar Steel India Ltd, expects domestic demand to start picking up given the accelerated GDP growth.
How do you expect the situation in China to play out? China is the world´s largest steel producer with an annual production capacity of nearly a billion tonne. China´s steel demand till date was largely investment-led rather than consumption-led. Still, China was exporting 50-60 million tonne (mt) till 2013. Due to the slowing down of its economy, Chinese exports have gone up to levels of 100 mt. In order to further stimulate the economy, the Chinese government has devalued its currency due to which exports have become more remunerative for Chinese steel companies. Countries like India will be unable to match the costs, kept artificially low due to government intervention. Flat steel imports from China rose 170 per cent from 57 kilotonne (KT) to 154 KT in the first quarter this fiscal compared to the year-ago period. It may rise due to currency devaluation.
What are the underlying key steel sectors you are upbeat about ? The GDP is set to grow at seven per cent this year which means the steel demand will remain stable. Infrastructure and manufacturing are expected to do well. Even the auto industry and especially the heavy commercial vehicle segment is picking up which augurs well for the steel industry.
What steps do you expect from the government to provide a fillip? The government has taken various initiatives already to stimulate growth. Approvals for infrastructure and road projects have been expedited a major is also being given to the manufacturing sector through ´Make in India´. All these measures are expected to give a fillip.
Has the ´Make in India´ initiative helped? ´Make in India´ is an excellent initiative to boost Indian manufacturing. It is for the long-term and will help to become a steel consuming hub, manu¡facturing steel-intensive products.
What is the direction the Steel Research & Technology Mission of India (SRTMI) initiative is taking? The objective is to promote collaborative research programmes in steel sector. SRTMI will carry out R&D in priority areas of national importance, covering best usage of available raw materials and conservation of natural resources, optimum energy conservation and minimum emissions leading to innovations and in-house development of design, enginee¡ring and manufacturing facilities of key steel plant equipment. As far as Essar Steel is concerned, we had set up our R&D department about a decade ago. It focusses on three areas, namely, raw materials, processes and new product development. Today, almost 26 per cent of our revenues are generated from the products developed in our R&D.
When do you expect demand to really pick up? Normally, demand grows 1.2-1.5 times the GDP if the GDP growth is about seven per cent. The GDP growth in India has already crossed this threshold, and hence, it is not out of place to assume demand will pick up from here onwards. The government has over the last six months approved a large number of infrastructure projects which were held up on account of approvals and announced new infrastructure projects as well.