Mr. V. R. Sharma, MD, JSPL Recommended Galvanized Rails for Indian Railways

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We have with us M.D of J.S.P.L Mr Vidya Rattan Sharma. Mr V. R. Sharma is a leading Technocrat with more than 37 years of experience in the Steel, Power, Cement, and Mining industries. He is currently working as the Managing Director of Jindal Steel & Power Ltd (JSPL), One of India’s leading conglomerates with Steel, Power, Mining, and Infrastructure interests.

Welcome Sir, to our One 2 One interview session.

J.S.P.L has envisaged to scale up steelmaking capacity from 8.5 million tonnes to approx. 25.2 million tonnes by 2030. Can you tell us how you will proceed with this? Are you going to raise funds for this, any CAPEX?

Mr V R Sharma: We have 8.5 million tonnes of capacity; we want to reach 12 million tonnes in a couple of years—another addition of 3.6 million tonnes.

We have taken the first step to increase capacity from 8.5 million tonnes to 12 million tonnes, and for that, we will invest 18 thousand crore rupees in the next three years. As far as funding is concerned, we have the arrangement from Indian banks. Also, we are exploring the possibility of taking a foreign loan in the form of ECA (Export Credit Assurance). We are very sure that this will be a financial and banking arrangement only. All of the funding will be from our own approvals. You know the banking system has to come into the picture. We are taking support from banks. We are planning to make a profit of 6000 to 7000 crores per year. This profit will be uploaded to the business.

In the process of production of steel, there is huge carbon emission? How you will manage carbon emission in the future as you will reach the production of 25.2 MTPA. of steel?

Mr. Sharma: We are serious about the Carbon emission issue. We are going to adhere to the Indian central pollution control board and the ministry of environment. So Whatever technology is to be brought into the country or whatever technology is to be adopted, we will adapt. We will not violate the norms laid by the government of India. So this is our main objective; the government of India has a very specific terminology on how much CO2 can be emitted in steel companies. All norms are set, and perhaps Indian standards are among the best in the world. So as far as the total standards are concerned. We will follow all of the standards which are mentioned by the government of India.

After the Pandemic, the construction activities have started back to normal, but Why is Domestic demand not picking up? What do you think?

Mr. Sharma: After the Pandemic, the construction activities have not yet started fully because most people and workers have gone back to their hometowns. Now the government of India has decided that they will vaccinate all of the people aged more than 18 years. I think once they take the first injection of the first dose and the second dose. After 84 days, they will return to work, and the construction activities will gain momentum. The workers working in MSME’s are coming back gradually. So this will take another 30 to 40 days.

I hope at the end of September, construction activities or MSME’s production will definitely pick up the pace.

There has been a sudden increase in the cost of steel products in the last one and a half years. Also, there is a correction going on. Do you see there will be furthermore correction in price across all products in this year or coming year?

Mr. Sharma: The international scenario of steel is very bullish. International prices are very high, and the spot market prices are also very high. The reason is that the input cost of steel has increased. Iron Ore, coking coal, everything has increased. So whatever we see today is a result of an increase in the input cost. Yes, of course, for the spot market is input level. The prices are much higher than the domestic market in India. There is a gap of about 6 to 7 thousand rupee minimum in the imported price into India versus the domestic steel. The steel sold in the country is cheaper than imported steel. So there is no point importing steel in the country, and the domestic market is fulfilling the requirement of the local Industry at a lower price than the international price. As far as the question of what is going to happen in one year or two years of time, It’s very difficult to predict. If the raw material prices come down then the steel prices may go down.

The major raw materials are iron ore and coking coal. If the price of Iron ore and coking coal will go up, then surely the steel prices will increase.

What potential does JSPL see as a private player in the rail business? Will there be any changes in the policies as far as foreign vendors are concerned or domestic vendors to get preference. Do you want any change in current policies or the unchanged policies are fit for the business?

Mr. Sharma: Yes, you are right; we are the only producer of specialty rail in the country today like 1080 head hardened rails, JSPL is the only company that is manufacturing 1175 Heat Treated rails. We also have asymmetric rails for the Indian railway and the entire railway system. In this context, we request a small change in the buying behaviour of most of the departments. For example, the housing and urban development authority, who are clearing the materials for rails and metro rails and also from Indian railways know that we are already qualified as a rail supplier now In some of the tenders they mention that we should have experience of two years or three years or five years or seven years before they buy rail from This is contrary to the spirit of  Atmanirbhar Bharat campaign launched by the honourable prime minister. We cannot have  Atma Nirbhar Bharat after seven years.

We have to start making Atmanirbhar Bharat today when our quality is far better than Europeans and when all the inspection is done by RITES or RDSO as per their norms. So why this particular barrier I mean, the criteria experience of two years, three years,/four years,/ seven years. So it is counterproductive and detrimental to the interest of the country.

This is against the Atma Nirbhar Bharat Policy defined by India’s government. The Honourable Prime Minister is urging us to make India Atmanirbhar Today, not after ten years. There’s a huge difference. So I request and urge all the government departments to give us clearance and start sourcing from us.

They will have benefits of price, delivery of overall services level and better quality of products, or better quality of rail than what we import today. We guarantee that our rails will be much better, They can get it tested anywhere in the world.

Our rails are much better than many rails being imported in the country.

R.D.S.O. has approved your three grades, so are you planning to launch some new product or any new categories?

Mr. Sharma: We are going to launch only one more grade that is galvanized rails, within the next 12 to 15 months. This will also be a new product for the Indian government or the Indian railway. For instance, in coastal areas or where there is heavy rain, railways can use galvanized rails. We will be really happy if the entire railway uses galvanized rail to increase the rail life 3 to 4 times. Today if the rail life is five years, we can increase the life of rails by about 15 to 20 years. This will also help in cutting down the overall expenses on buying the rails. So the government will also gain, and the country will also gain because replacement cost is always very high.

This is the only product we would want to bring out within one and half years. Otherwise, if any other rail grade the government of India asks, we can definitely produce all those rails for their requirement because rail is not a commodity. Rail is to be used by Indian Railways or metro rails. If they need some special rail, we can do it, but the problem here is if we produce some rail, they should not tell you not to have an experience of two years or three years for this particular product. That is unfair.

Talking about the High-speed rail project, In the Mumbai-Ahmedabad rail project, what is the major Role of JSPL? Are you exploring opportunities in this?

Mr Sharma: There are two kinds of projects one is funded by the government of India the other is funded by foreign governments like Japan, Korea or any other. The countries or people funding any project put a condition to buy the rails from them. We urge the government of India that we do not accept such a condition from them and they should allow the Indian Rails to come in the railway track then only we can make India Atma Nirbhar. This signalling system, the electrical system, maybe speciality engines they can import, but all other items made of steel should be built in India under the Make in India Program than India becomes only Atma Nirbhar. They should allow the Indian supplier to come forward, of course; the quality has to be perfect.

How much steel are you planning to produce this year?

Mr Sharma: We will produce 8.5 million tonnes.i.e. 85 Lakh ton.

Do you feel there is much opportunity lying for you as a company to grow in Rail – Business?

Mr Sharma: No, I don’t think that there are big opportunities in the rail business because the government of India plans to buy 1.7 million tons which they were thinking two years back that is not coming true. So It’s not practical for them today for some reason. They are buying a quantity of about 1.2 million tons and we make all the grades but they have not given us the order. So we are expecting that Indian railways should give us the order this year.

We should be treated as a reliable source, and they should give us the order. Yes, Metro Rail has given us the order, but they are limited to 20% of the total order value. We expect that they should give 100% order because any other company does not make those rail 1080 rails. There is no competition in those rails. So I urge Indian railway to start using 1080 grade and 1175 grade, a fresh so that a level playing field is available between their existing supplier and J.S.P.L.

Please briefly describe which rails & metro product JSPL is focussing on right now?

Mr Sharma: 1080 Head Hardened Rail

Is there anything you would like to add for our viewers and your stakeholder?

Mr Sharma: Whatever is in the prime minister’s mind or whatever is in the mind of the steel minister that should be fulfilled, i.e., making India Atmanirbhar Bharat Today, not after ten years.

Tell us about your debt reduction plan?

Mr Sharma: We were at a level of about 45,000 crores of debt in 2016-1 7. Today, our debt level is 20,000 crore. We will bring it down into four figures, i.e. below 9,999 Cr in the next financial year.

That was Mr V.R. Sharma, sharing with us all the insight of J.S.P.L and other opportunities. It was a pleasure talking to you, sir. Thank you for this One 2 One interview with Metro Rail News.

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