Jindal SAW Business Outlook

Jindal Saw Ltd has announced the following Outlook:

Industry

Rising Demand for steel pipes is expected to be higher in the medium term on account of increased exploration activities and thrust on setting up infrastructure to transport oil and gas. In India, rapid economic growth faces an urgent need to develop and improve water supply, which would also increase demand for SAW pipes. Depleting oil reserves have led to increased exploration efforts, resulting in more wells in the exploratory rig. Demand for seamless pipes is directly proportional to the increase in digging of wells which is also expected to remain high.

India is expected to see a spurt in construction of pipeline infrastructure as the country's spending on exploration and production (E&P) and gas related pipeline capex increases. It is expected that water and irrigation offer a very strong business opportunity in India, which will benefit Indian HSAW, ERW and DI pipe manufacturers, in addition to the opportunity from the energy sector.

Company

The Company follows a multi-product approach to pipes - offering a full product portfolio of LSAW (longitudinal submerged are welded), HSAW (helical submerged are welded), seamless, DI pipes, anti-corrosion coatings, connector casings and Hot reduction Bends. Its product portfolio allows it to comfortably straddle between value-driven products (DI and seamless pipes, which are high-margin segments) and volume-driven ones (SAW pipe business).

Besides LSAW and HSAW, It is increasing its focus on the water infrastructure sector in India. Your Company is currently one of the very few pipe manufacturers capable of offering a complete pipe solution to the water sector (ie, spiral pipes, ductile pipes and accessories). The DI pipe business gives your Company an opportunity to take advantage of the strong domestic capital expenditure cycle seen in the water transportation segment in India. A combination of increasing government focus to build water infrastructure and rising support from multilateral agencies (such as the World Bank and the Asian Development Bank) is likely to result in a strong demand for the DI pipes. Your Company is implementing capacity expansion in all the three key segments with expectation and targets for overall margin expansions.