Standalone volumes were lower in Q3 and they have been impacted by both lower exports and muted domestic sales. Would you call it a structural fall in the incremental demand or it is just transient?
Jayant Acharya: Just to highlight on our performance for Q3, we have done a very strong production performance in Q3, 6.87 million tonnes, which was the highest so far in JSW Steel, both in Indian and overseas operations.

On the sales side, we did 6 million tonnes, which was quarter-on-quarter minus 5%, but it was 7% higher year-on-year. The primary reason for the drop quarter-on-quarter was lower export sales because the global markets were weaker and that is why the export numbers were weaker and higher imports coming into India, which affected the retail sales.

However, our sales to institutional customers, OEMs, and industrial, was at an all-time high. Our automotive sales, our sales to the renewable industry and to the packaging industry was the highest in this quarter. So, we maintain our focus on all our industrial and institutional customers and continue to do well in those. It only has a limited impact on sentiment and imports, which resulted in a channel destocking in retail and a drop in exports.

However, we are seeing improvement in global steel prices in the last few weeks and that would lead to a close to domestic parity on prices. Therefore, the imports are likely to go down. It will also encourage more export volume out of India, as there is attraction in terms of prices internationally, which has gone up.

Realizations, too, have been muted this quarter. Steel prices since the month of October have been on a declining trend. The question is where do you see steel prices headed, given China’s government stimulus?
Jayant Acharya: The China property sector has been weaker. But the other sectors, including the infrastructure, manufacturing, renewable, etc., have done better. Automotive sales have been at an all-time high. They have been able to balance out the shortfall in the property sector. China is providing targeted stimulus and we are expecting more policy measures in the first half of this year, which they will take to support their economy. And that should improve some part of their domestic demand.

That would reduce the exports out of China. Having said that, I would like to point out that the raw material prices are elevated and therefore, the margins, even with China, are under strain. We are seeing prices going up internationally. In China, Europe, the US, we have seen prices move up. We feel that this would be reflected in the coming months in India as well. And with a seasonally stronger quarter, we believe that India demand perspective also will do better.You talked about import competition. Any initial signs of a reduction in competition from imports then?
Jayant Acharya: It is probably early days but bookings have gone down as domestic steel prices are close to international prices. At this level, it may not make practical sense to import.

Raw material costs too have started rising. Your standalone EBITDA per ton fell about 13% sequentially. What is the outlook on raw material pricing trends and your spreads for the next few quarters?
Jayant Acharya: Our EBITDA was Rs 7,180 crore, with EBITDA per ton of Rs. 11,957 per ton on a consolidated basis. Our margins stood at 17.1%. Our India operations per ton was also very similar at Rs 11,900 per ton and not very different from our consol. Our overseas operations in Q3 have done quite well. And both from the US and Italy perspective, they have contributed positively to the EBITDA. And that is why you are seeing a marginal uptick in the consolidated. Indian subsidies overall also have done well.

So from a per ton perspective, it is difficult to comment, but the way I would like to put it is that in Q4, we see the iron ore prices and coking coal prices remaining elevated and that would increase our costs and put pressure on the margin. However, from a volume perspective, we expect Q4 to be better because it is a seasonally stronger quarter.

The export volumes are now picking up with better realizations and we expect that the global steel price increase will reflect in India in the coming month to some extent. Therefore, it will partly offset the cost increase which we are likely to see in Q4.

You have scaled back your capex guidance for the full year. What is the reason?
Jayant Acharya: No, I have not scaled it back. I would say that if you were to look at the capex spend, the capex spend, because there is an election in the interim, the capex spend for one quarter may be slightly lower because there will be an interim budget but we see the direction of the spend being quite strong. That would continue post the elections and the general activities of manufacturing will continue.

So we will see automotive, renewable, and other spaces being also quite strong. I have not scaled it back. You may have a small disruption. You may have a consumption expenditure increase but on the capex side, there may be some delay during the period of the election in the interim. That is all.

Last time you categorically said that you will be looking at strategic assets and that you have given an EOI for NMDC Steel, what is the update here? What’s the progress?
Jayant Acharya: No additional information as such. It is more or less similar. On the coking coal side, we continue to scout for assets and are looking for assets in various parts of the world, including Canada, Australia, Mozambique and elsewhere. We will certainly give you an update as and when we have more clarity of that.

Any interim budget expectations that you may have for the sector?
Jayant Acharya: I would say this is an interim budget and so we will have to look at it like that. But I would basically feel that the government would continue their public capex, which they have been doing on infrastructure because that has been growing the economy quite well.

A focused approach on improving manufacturing through Atmanirbhar Bharat (self-reliant India) has stood us in good stead. I would expect the government to continue to focus in this direction and progress will continue to improve the steel consumption in the country. The per capita income is also rising with an inclusive growth, which we are seeing across India. The rural footprint now is showing some improvement. Two-wheeler sales are improving. MNREGA demand has gone down a bit.

While in terms of fast-moving consumer goods (FMCG), it is still a little slow but we are still seeing pickup there. Therefore, we would expect the government to continue that track. On the import side, our concern is that India is an outlier in the world today. The economic growth in India at the moment is quite strong, and that is reflected in the steel consumption in India.

We would like to be cautious about cheaper imports coming into India at unfair prices and the government would need to probably look at those and look at appropriate measures to see that it does not hurt the domestic industry.