JSW Steel to cut down global exposure, focus on rural mkts

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Hyderabad: JSW Steel Ltd, one of the main players in the steel industry, has cut down its exposure to the international market and has started focussing on rural India. The company is opening retail outlets through franchisee route to get deeper into the rural market. Currently, it has opened 60 such retail outlets in smaller towns and districts and is planning to take it upto 600 outlets across the country over the next two years.

According to Sajjan Jindal, vice chairman and managing director of the company, steel prices in the international market has dropped from $ 1200 to $ 450 per tonne. Because of the downturn, the international markets including Europe, USA and Japan have virtually collapsed. “Infact, because of this bout of recession that we are experiencing, inventories got piled up at JSW Steel and we were forced to shutdown our blast furnace. We changed our approach and started focussing on rural market by opening retail outlets in villages and districts. The response has been terrific and the company already booked orders till June 2009”, he said. He was here in the city to participate in a seminar on ‘Economic Meltdown and Time Ahead’ organised by NMDC Ltd.

The demand is coming from the rural sector especially in the housing side. When the steel prices dropped by almost 50%, cement prices went down only by 5-10%. This has incentivised people in the rural sector to go for more steel products rather than cement, creating more demand for steel companies. In the infrastructure too, if the market picks up the demand for steel would go up further, he added.