Investing ₹700 cr in renewables; margin outlook challenging: Abhyuday Jindal

Jindal Stainless has heavily invested in renewable power. We’ve signed two MoUs with renewable energy companies. A third is under consideration at the moment. Together, these partnerships aim to set up around 900 MW of renewable energy generation capacity, with an investment potential of ₹700 crore.

Looking ahead, we’re focused on round-the-clock renewable energy, which we plan to ramp up over the next few years. Our commitment remains towards not expanding our thermal power plants. Instead, we will tap into renewable energy sources to meet our growing energy needs.

As renewable energy becomes more accessible, we will increase its share across all our operations.

We were the first stainless steel player in India to set up and operate a green hydrogen plant for our bright annealing process.

While our Electric Arc Furnace (EAF) technology doesn’t require green hydrogen for ore reduction (unlike traditional blast furnaces or DRI processes), we are still exploring ways to incorporate hydrogen into other parts of our steel-making process. To support this, we are scaling up our green hydrogen capacity across multiple sites.

For instance, at the Hisar plant, we’re expanding our green hydrogen production by 200 NM3/hr; and at Jajpur, we’re in advanced discussions for an additional green hydrogen capacity.

Yes, we’re definitely starting to see some cost benefits from using more renewable energy, though it’s still the early days. We’re just ramping up our renewable energy sourcing and over the next few quarters will have a more clearer picture on numbers.

Over the last couple of quarters, we’ve noticed that shifting away from traditional energy sources has helped reduce our reliance on fossil fuels, which can be more unpredictable in terms of pricing.

The margin outlook remains challenging as NSR (Net Sales Realisation) continues to be under-pressure, primarily due to volatile raw material prices and increased imports.

The NSR is closely linked to the pricing trends of key raw materials, especially nickel, ferro-chrome, and molybdenum, which have been fluctuating due to global supply-demand dynamics, geopolitical factors, and exchange rate variations.

Given that India is highly dependent on import for critical inputs like pure nickel and ferro-nickel, any volatility in international markets directly impacts domestic pricing and margins.

To protect the domestic stainless steel industry from the disruptions caused by low-priced imports and to ensure a level playing field, we had urged the government to increase the basic customs duty on stainless steel products to 15 per cent for all non-free trade agreement countries. This request is currently on hold.

We appreciate the government’s decision to maintain zero import duties on essential raw materials that are not available in India, such as pure nickel, ferro-nickel, stainless steel scrap, and mild steel scrap.

Despite challenges posed by the dumping of substandard stainless steel from China and certain FTA countries, which exerted pressure on our margins to some extent, we successfully achieved y-o-y sales growth in Q3FY25.

Resultant, domestic sales grew by 20 per cent y-o-y this quarter, reaffirming bullish demand on the domestic front.

Niche product offerings, and long-standing customer relationships, apart from a well-entrenched distributor network remain our strong-points.

We made significant inroads in industrial infrastructure, as well as the architecture, building, and construction segments. Tailored solutions for OEMs fuelled growth in the white goods segment, while value-added offerings in special finishes continued to drive demand.

To reduce dependence on raw material imports, Jindal Stainless announced acquisition of a Nickel Pig Iron (NPI) smelter facility in Indonesia in March 2023. In August 2024, eight months ahead of schedule, the smelter was successfully commissioned. Developed through a joint venture with New Yaking Pte, this facility is the first major overseas raw material investment by an Indian stainless steel manufacturer.

As part of our strategic ₹5,400 crore investment announced in May, we entered into a collaboration agreement with a Singapore-based entity to establish a stainless steel melt shop in Indonesia with a capacity of 1.2 million tonnes per annum (mtpa).

The global stainless steel market is currently undergoing challenges such as declining stainless steel prices, lower end-user demand, and rising inventory worldwide. However, despite these challenges, India’s domestic market remains resilient and is poised for strong growth. We anticipate a double-digit growth in FY26 (in India), banking on greater infrastructure push post the Budget announcements.