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“Out of the export portfolio, 80-85% of our export business is not affected. There is tax on export of pellets and there is going to be oversupply in the domestic market now and the margins are going to be affected for some time,” says Brij B Agarwal, Vice-Chairman and Joint MD, .

What is your export exposure and how worried are you about export levy on steel? What will it do to your prices?
First of all, 16% to 17% of our revenue comes from the export business. Out of the export portfolio, 80-85% of our export business is not affected. There is tax on export of pellets and there is going to be oversupply in the domestic market now and the margins are going to be affected for some time.

Apart from that, Shyam Metalics has multiple products of specialty alloys, billets, sponge iron, aluminium. Out of that, pellet is affected and may be for a time we will see the margins in the raw material business will be affected but later on, once we see ease out on the raw material prices, the margins will also be improving in times to come, because long products is one business where we have a major contribution and it does not have a very strong export component overall compared to flat products.

But the effect is going to be there on the sentiment part and since the inflation is also increasing, buying is a bit on the slower side.

You have a very diversified portfolio and that will augur well during these tough times but could you quantify what could be the margin impact and how prices will correct in the domestic markets?
There will be some impact immediately because any decision on the restriction imposition on the supply side is going to affect the price. It may see a correction of 4% to 5% in the times to come on the pricing side because there has already been a correction in this quarter. I do not see any correction going beyond that but yes in the time to come, it will become normal.

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I know that you are hoping that over time things will become normal but for now it looks like the markets are punishing a lot of the companies within the metal sectors on the back of this duty rejig. What is the outlook when it comes to realisations? Do you think that increased demand due to lower prices will compensate for the decline in realisations?
We are more concerned about the margins. As a manufacturing company we are all concerned about margins and domestic demand from the construction side and the infrastructure side is increasing. In auto sectors and everywhere, we are seeing business is doing fairly well. So this is just a temporary phase. Maybe we will see some corrections on the pricing front. But in the times to come, the pressure has to ease out on the raw material.

In the mid-term and long term, we do not have that kind of supply on the metal space from our country and the kind of demand that we are seeing, the growth that we are seeing, makes us very positive.

You said that the export component is 16-17%. What happens now with the deals that have already been signed and what is the future of some of the deals that were in the pipeline?
Our major contribution on the export is on the speciality alloy and pellets and so on the export side where we have a duty impact, we have very low contribution. I do not think it is going to majorly impact us, but yes, maybe a very little portion of less than 1%. As Shyam Metalics, we are not really bothered by this impact of any kind of an export commitment on the duty side.

From the industry point of view, how worse off would India now be versus other countries in terms of the prices given that there is a supply crunch globally? Do you think that despite the levy, there will be a good export demand?
As a country we are growing and so we are not very prominently dependent on the big export market. But yes, metal prices are more or less globally driven. It will impact and affect the Indian market but from the supply and demand perspective, India would not be very much bothered because our growth rate is very good and steel demand is also increasing but yes maybe in time to come, when there is a global shortage, exports from India have to be matched with the price and so maybe the global price will increase.

Also with the geopolitical issues in neighbouring countries, India will always be a darling for everyone to look for. This maybe a very temporary phase and in times to come, all this is going to be substantiated with the raw material pricing and all.


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