Heavy imports from China, weak demand particularly in the auto sector have led to tremendous pressure on steel prices explains Goyal.
Furthermore, he adds that the company’s Q4 volumes are likely to see a hit owing to imports from China.
Below is the verbatim transcript of RK Goyal’s interview with Nigel D’Souza and Reema Tendulkar on CNBC-TV18.
Nigel: Could you tell us with regard to your topline, it has come absolutely flat. Was there a dip on volumes or was there a dip on realizations?
A: There is a dip on volume and largely because of very heavy imports from China. In fact we are wondering how the next quarter will be because the imports from China has multiplied and this is affecting our volumes substantially.
Reema: Can you give us the number, how much did your volumes degrow in Q3?
A: Our volumes had gone down by almost 3-4 percent in Q3 as compared to Q2. However, we are fearing the volumes will have a much larger impact in Q4 as major part of imports have started coming from China in Q3 and it continues now and it is increasing everyday.
Nigel: Steel prices have also been under pressure so any kind of hit on that front or on sequential basis were prices stable on a year-on-year (YoY) basis, were they higher?
A: Steel prices are under tremendous pressure as you have rightly said and it is basically because 1) heavy imports from China and 2) weak demand particularly in auto sector.
Reema: Despite the volumes being under pressure as well as realizations you have managed to improve your margins. What aided this margin improvement and what is the outlook on the margins going ahead?
A: We are able to maintain our margins since last couple of years basically because of very heavy focus on cost reduction. Some of the benefits of various projects which we had taken up are still coming. So, we will be able to maintain the margins because of the cost reduction but then there is a limit to it so going forward it doesn’t look that we will be able to maintain if we are forced to reduce the prices any further.