We will not carry debt but ramp up earnings: Ravi Uppal
Jindal Steel & Power’s Managing Director & Group CEO Ravi Uppal talks about the company’s debt situation, sale of assets and its new endeavour - head hardened rails. With this project, he tells Megha Manchanda, the company plans to capture opportunity present in the freight corridor and Metro projects. Edited excerpts:
Elucidate on the company’s head hardened rails project.
After two-and-a-half years of effort and spending Rs 200 crore, we have been able to commission the project. It is technologically sensitive. There are only seven players that can produce head hardened rails. We have joined the elite club. In India, we are the first ones to do so. At present, head hardened rails used in freight corridors or Metros, are imported. Now, we are going to replace the imports with locally produced ones.
What sort of business does the company anticipate from Metro projects planned across various states in the country?
The segments that are in the horizon for head hardened rails are Metros and freight corridors. We have used about 6,000 tonnes of rails in about 12 Metro projects and as many as 20 more Metros are planned. We estimate the requirement for them to be about 750,000 tonnes. The total demand from Metro projects – both planned and under process — would be 1.2 million tonnes. The bigger demand comes from freight corridors. Our endeavour is to reduce the price difference between normal rails and head hardened rails. We will narrow the gap between the two kinds of rails, so that it becomes easier to switch from normal to head hardened ones.
What would be the contribution of rails to the company’s revenues?
At present, the rails business contributes Rs 2,000 crore annually to the company’s overall revenue. We are currently producing 25,000 tonnes and, if we double it, we should be able to accrue Rs 3,500 crore as soon as we achieve full capacity of the rails business. That could take us about two-three years.
On the one hand, the company is unveiling new projects like head hardened rails but on the other, it is facing some serious debt issues. Some of the company’s projects are on sale. How do you plan to deal with the company’s debt situation?
The steel industry has gone through stress – both locally and globally. Let us not make one company an exception. Some people talk about it, others don’t. The Indian steel industry added a lot of capacity between 2010 and 2016 but, by then, the demand had plummeted. Even Finance Ministry Arun Jaitley said we needed to differentiate between a company issue and an industry issue. In case of steel, it is an industry issue and, therefore, we need to take a candid and compassionate view. We are not going to carry any debt on us; we are going to ramp up our earnings. Whatever is not integral to our business, we will try and clean it up.
Are you looking at selling your non-core assets in Australia and Botswana?
The problem is that suddenly coking coal prices have gone up by 60 per cent and we are the only Indian company with coking coal assets. We are, therefore, going to cash in on the opportunity. We have started operations in Australia and Mozambique. One of the mines in Australia is operational; we have applied for clearance for the other mine.