Steeling up during tough times

V.R. Sharma, Managing director, Jindal Steel & Power

One Indian company which withstood the COVID-19 crisis and emerged stronger is Jindal Steel & Power. Managing director V.R. Sharma reveals the tough times and how the company managed to overcome it in 2020 in an interview with N. Rao

When the COVID-19 lockdown began last March, many manufacturers shut down their operations across India. But Jindal Steel & Power Ltd (JSPL), an industrial powerhouse with a dominant presence in steel, power, mining and infrastructure sectors opted for a different path.

“When lockdown was enforced, the domestic market for steel was closed,” recalls V.R. Sharma, managing director, JSPL. “There was no other option – either shut down our plant, or export.” The company, with a 10 MTPA iron-making capacity and 5,034 MW of power generating capacity, opted to continue with production and export steel.

There was good demand for its products in Italy, France, Denmark and Germany, recalls Mr Sharma. All these European countries were suffering as COVID-19 wreaked havoc and their steel mills were shut. “Many of the farsighted traders placed orders on us. In fact, the first international orders began flowing in from the fourth week of March.

Similarly, countries in the Gulf region including Saudi Arabia were also dependent on products from China, which had, however, virtually stopped all exports. JSPL, which is headed by Naveen Jindal, the Chairman, got orders from Kuwait, the UAE, Bahrain, Oman and Qatar.

In Southeast Asia, it discussed with traders and began getting orders from buyers in the Philippines, Indonesia, Vietnam, Malaysia and Taiwan, Even in Australia, many opted for JSPL’s products. “We got orders for 1.5 million tons in April at the height of the COVID-19 crisis,” recalls Mr Sharma.

Globally, there are about half a dozen leading steel-producing nations including India, China, Russia, Iran, Korea and Japan. But the crisis of 2020 saw just Russia, Ukraine and India supplying steel. And with winter setting in, most of the international buyers are now depending on supplies from India, he explains.

According to him, JSPL has done well through the crisis as the Indian government supported the industry in many ways. “They declared steel as an essential commodity and we were allowed to operate our plants,” explains Mr Sharma. “The downstream industry was also allowed to function.”

Importantly, the government ensured that railway services were in operation, resulting in smooth transport of the products. This helped companies such as JSPL to transfer imported raw materials from ports and also send the finished products to ports around the country. The company took the lead from the initial days of the crisis.

Many ships were waiting in the high seas and when they got calls from JSPL, they quickly returned to the ports, picked up the steel and delivered the products abroad. Naturally, sea freight costs also dipped substantially and the company got competitive rates.

“Indian steel mills are very busy these days,” adds Mr Sharma. “The price of raw materials and other costs have also risen and steel prices are at their peak now.” With the lockdown being lifted in many countries, he expects demand for steel to continue over the next six to eight months.

Demand for both steel and cement will be buoyant this year as projects that had been stalled last year get revived. The company has been growing 17 to 18 per cent on a year-on-year basis and profits have also soared. Last year, the company had made a loss, but this year revenues and profits have climbed phenomenally.

JSPL has taken the lead, consolidating its position in the industry. “This will continue over the coming months,” he explains. The company has also launched a 15:15:50 strategy, relating to its debt burden (which should be less than Rs15,000 crore) and turnover, which is targeted at Rs 50,000 crore.