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Jindal Stainless navigates Red Sea crisis, adjusts export targets, eyes European expansion
Industry News- Jan 19,24
Due to the Red Sea issue, both time and cost associated with shipments to Europe have increased. Jindal anticipates a decline in Q4 export sales, revising the target from 15% to around 12%.
Jindal Stainless Steel shipments have been adversely affected by the crisis in the Red Sea, posing a threat to its export targets, according to the company's managing director, Abhudhay Jindal. Despite reporting a 35% year-on-year increase in consolidated net profit to Rs 691 crore in the December quarter due to rising domestic demand, the company faces challenges in the European market.
Due to the Red Sea issue, both time and cost associated with shipments to Europe have increased. Jindal anticipates a decline in Q4 export sales, revising the target from 15% to around 12%. The slower pace of Europe's recovery, compounded by geopolitical issues, contributes to the cautious outlook. However, the company remains optimistic about meeting volume guidance, driven by strong domestic demand in the face of a global slowdown in stainless steel markets.
To counterbalance the impact of reduced exports, Jindal Stainless plans to focus on domestic sales. Additionally, the company's board has given in-principle approval to make Iberjindal, Spain, a wholly owned subsidiary, citing robust demand for stainless steel in European markets. The move aims to capitalise on the growing demand in Spain, Portugal, France, and Italy. Jindal Stainless sees this as an opportunity to expand in Europe, especially considering the current market conditions.
The company also disclosed plans to explore liquidating its 26% equity stake in its subsidiary, Jindal Coke Limited, as its business activities no longer align with JSL. The board has already approved the liquidation of its stake in PT Jindal Stainless, Indonesia, due to the entity becoming unviable in the face of unfair competition with Chinese products. Despite these challenges, Jindal Stainless remains positive about the rising domestic demand, especially in the auto sector and the decorative pipe and tube segment.
Source: Mint
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