JSW Steel has announced plans to invest Rs. 40,000 crore in the next three years, even as lending rates continue to rise globally. Seshagiri Rao, Joint Managing Director, JSW Steel, in an interview with BusinessLine exuded confidence about the revival in steel demand holding and the company maintaining financial matrix despite huge capex. Excerpt:
How do see progress of NCLT cases in last one year?
All the issues relating to NCLT cases have revolved around two important points — intention of Insolvency and Bankruptcy Code (IBC), and Section 29A. If IBC is only for maximisation of asset value notwithstanding the process, then anybody can interrupt the process to place a higher bid. As of now, the judgment in different cases are contradictory. There needs to be clarity on whether Section 29A is directory or mandatory. If it is directory then defaulting promoters can also offer higher value. Unless these two issues are sorted, there will always be litigation and finally the Supreme Court has to take a call.
What is your view on changes being made in IBC?
The latest Ordinance allows lenders to withdraw insolvency cases if 90 per cent of them agree and certain conditions are adhered to. But the conditions to be met have not been prescribed. However, a press release issued in this regard states that cases can be withdrawn only before Expression of Interest is issued. Whereas, the Ordinance does not mention this. This issue needs a clarification from the government.
What is driving steel demand in India?
The economy looks better now as compared to last year. In May, steel demand increased 8.6 per cent. The demand is so strong that there is a concern on availability of steel. For the first time in last five years the demand has grown 1.2 per cent of GDP. Last fiscal, the demand used to be 0.4 per cent of GDP and at times it even lagged GDP growth. The demand has picked up in user industry after a long time. Now everybody has started expanding capacity. The government spending is also quite robust.
How do you see the global trade war impacting steel demand in India?
Any trade related decision by one country will lead to retaliation by the other. Whether it is good or bad only time will tell. These actions are required in unfair trade. The current trade war will have a huge impact on the global economy. I am not concerned about the fall in steel exports from India as long as there is no sharp rise in imports into India.
How do you compare India and US trade restrictions?
Indian trade restrictions are not comparable with the US. There is a 25 per cent duty on steel imports to the US. That is why HR coil prices in the US are higher by $250-$300 a tonne compared to $600 a tonne in other markets. India should work out safeguard duty.
via JSW Steel: Clarify NCLT processes; consider safeguard duty on the metal – NEWS – Business Line
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