JSW Steel, Tata Steel see no threat to business with ArcelorMittal's entry

Both companies see ample scope for new players in the market, where steel demand is likely to grow by a good 7-8% a year as against the global pace of demand growth of around 5%.

Large domestic steel players see no threat to business even if Luxemburg-based ArcelorMittal enters the Indian steel market.

Both Sajjan Jindal-led JSW Steel and Tata Steel, the country’s oldest alloy producer, see ample scope for new players in the market, where steel demand is likely to grow by a good 7-8 per cent a year as against the global pace of demand growth which is seen at around 5 per cent.

"With the quality of steel that we produce and the technology we have along with cost efficiencies and product mix, we are quite competent. I don’t think we have to be concerned about what others will do. In fact, we are already competing with the same players in the global market at present," said Seshagiri Rao, group chief financial officer and joint managing director, JSW Steel.

ArcelorMittal has emerged as the preferred bidder for Essar Steel, which has a capacity of 10 million tonnes in Gujarat. The company faced stiff competition from Mumbai-based JSW Steel and Numetal Mauritius--led by Russia's VTB Bank.

As per industry officials, Essar Steel does have scope for brownfield expansion at the existing Hazira facility as large-sized blast furnaces with multi-million-tonne capacity, if installed, can take the capacity to 18 million tonne from 10 million at present.

“A healthy and mature competition is always welcome. We feel that with new players, the Indian steel industry will only benefit as customers will get choice. As for us, we have the needed technology, equity and capabilities to compete with them since we are familiar with this competition in the global market,” said T V Narendran, chief executive officer and managing director at Tata Steel.

Apart from Lakshmi Mittal-led ArcelorMittal, UK-based Liberty House will also be a new entrant in the domestic steel industry, as it acquired insolvent Amtek Auto and Adhunik Metalliks from among the National Company Law Tribunal (NCLT)-listed companies.

Currently, JSW Steel has a total capacity of 18 million tonnes, which it aims to take to 25 million tonnes and then to 40-45 million tonnes by 2030. Tata Steel too is focused on increasing capacity in the domestic market and aims to take it to 30 million tonne by 2025 from 13 million at present.

Meanwhile, the two domestic players are also looking to broaden their market share by differentiating its product line and transitioning from a volume-to value-based player. “We already have 60-70 per cent of our business in downstream and going ahead we aim to grow this as we aim at customised products,” informed Narendran.

To maintain a 14-15 per cent of market share, JSW Steel aims to take its downstream business to 60 per cent from the current 35-40 percent. “De-commoditising steel is our plan and we are focused on having speciality and value-added steel in our portfolio which will create value and not just volume for the company,” explained Jayant Acharya, director commercial of JSW Steel.

Business Standard