KOLKATA: Domestic steel companies are increasingly targeting a substantial chunk of their production for exports to reap the benefits of a falling rupee and offset dwindling margins in a dull domestic market.
This could perhaps also mark the first time that Indian steel companies are embarking on decisive export marketing strategies. While the rupee fall and slow demand at home is acting as an immediate trigger, a more compelling reason for exports could be to find alternative markets for their expanded production capacity and a more enriched product basket.
Taking advantage of its shore-based location Rashtriya Ispat Nigam Ltd (RINL), which runs Vizag steel plant, said it has drawn up a decisive marketing strategy to beat the prolonged slowdown in steel market at home. While one leg of it rests on targeting 25% of RINL output for exports and opening up new geographical market segments, the other part depends on enriching its product basket with customised high-end products to a develop niche market. For the first time ever, RINL has created an International Marketing Division (IMD) headed by a general manager.
"The company's first international marketing office will open at the World Trade Centre in Colombo which will also be RINL's export hub," TK Chand, director (commercial) said. RINL wants to create a market presence in South Asia, South East Asia, Central Asia, Middle East Asia and African countries. Apart from Nepal and Myanmar, the company also hopes to export high value oil & gas sector products like API rounds and seamless tubes to Iraq. A leading exporter of pig iron, it hopes to emerge as a top exporter of long products in steel.
The country's largest steel company, Steel Authority of India Limited (SAIL) is also aiming to nearly double export volumes to 7 lakh tonne this year. Export revenues, too, are likely to double to Rs 2,500 crore in FY14, CS Verma said recently. JSW SteelBSE 1.89 %, the largestprivate steel player, is planning to export nearly 3-4 million tonne (mt) of steel in the current fiscal.
Last year, JSW had exported 1.9 mt. "Fall in rupee and product mix of Indian companies have made them much more competitive in international markets," JSW Steel's joint MD and group CFO Seshagiri Rao said.
JSW has added new markets like China, Japan, South Korea and US to its export basket in recent times. Earlier, it used to sell its products to Middle East, South-East Asian and African countries, he added. Essar Steel, one of the largest exporters from India, said it plans to step up exports 20-25% this year.