1. Economic Overview
i) Global Economic Overview
The global economy is showing signs of resilience with growth picking up and inflation returning to target. The journey has been eventful, starting with supply-chain disruptions in the aftermath of the pandemic, a Russian-initiated war on Ukraine that triggered a global energy and food crisis, and a considerable surge in inflation, followed by a globally synchronized monetary policy tightening.
Yet, despite many gloomy predictions, the world seems to have avoided a recession, the banking system proved largely resilient, and major emerging market economies did not suffer sudden disruptions. Moreover, the inflation surge—despite its severity and the associated cost-of living crisis—did not trigger uncontrolled hyperinflation. Instead, almost as quickly as global inflation went up, it has been coming down.
On a year-over-year basis, global growth bottomed out at the end of 2022, at 2.3 percent, shortly after median headline inflation peaked at 9.4 percent. According to the latest projections of International Monetary Fund ("IMF"), growth for 2024 and 2025 will hold steady around 3.2 percent, with median headline inflation declining from 2.8 percent at the end of 2024 to 2.4 percent at the end of 2025. Most indicators point to a soft landing.
The growth projection for 2024 is higher than the IMFs earlier estimate of 2.9%, reflecting upward revision for China, the United States and some large emerging market and developing economies.
The global growth will continue to be driven by emerging market and developing countries such as India. IMF has projected emerging market and developing countries to grow at 4.1% in 2024 and 4.2% compared with 1.5% and 1.8% growth in advanced economies during the same period. According to IMF projections, India will continue to be the fastest-growing large economy in the world, growing at 6.5% each in 2024-25 and 2025-26.
The upward revision in growth forecast for 2024 is on account of stronger-than-expected economic growth in the US and some major emerging market and developing economies in the second half of 2023, helped by government and private spending.
The rising momentum, however, will not be uniform everywhere. The growth in the Euro Area is projected to be subdued due to weak consumer sentiment, high energy prices, and elevated benchmark interest rates. Low-income economies will also continue to experience large output losses compared with their pre-pandemic trajectory amid elevated borrowing costs.
The global financial system has broadly withstood the unprecedented monetary tightening across the world with the resilience of emerging market economies, which were at the receiving end of the previous episodes of volatility, standing out.
The global economy is still not out of the woods with the growth forecasts for 2024 and 2025 significantly below the historical average of 3.8% during 2000-2019. Elevated policy rates to fight inflation, the unwinding of fiscal support, and low underlying productivity growth are still impairing global growth.
Outlook
The IMFs overall outlook on global economy shows an improvement from the previous estimate. The IMF has raised its growth outlook for 2024 to 3.1% from 2.9% and cut its forecast on global headline inflation in 2025 to 4.4% from 4.6% earlier.
| Particulars | Estimate (%) | Projections (%) | |
| 2023 | 2024 | 2025 | |
| World Output | 3.1 | 3.1 | 3.2 |
| Advanced Economies | 1.6 | 1.5 | 1.8 |
| Emerging Market and Developing Economies | 4.1 | 4.1 | 4.2 |
| India | 6.7 | 6.5 | 6.5 |
A sense of optimism has pervaded financial markets in recent months, amid investor confidence that the fight against inflation is entering its "last mile" and that central banks will ease monetary policy in the coming months. Stock markets around the world have risen substantially this year. Corporate and sovereign borrowing spreads have narrowed.
However, there are likely to be bumps along this last mile. Geopolitical tensions including the latest brewing in the Middle East, could intensify and weigh on investor sentiments. Strains in commercial real estate have become more acute, which could increase pressure on some lenders.
Taking a step back, there is recent evidence that disinflation may have stalled in some countries, and that underlying inflation may be persistent in some sectors. In some cases, core inflation has come in higher than analyst forecasts for consecutive months. Higher-than-expected readings could challenge the last-mile narrative and the related investor optimism, potentially leading to financial market repricing and higher volatility. IMF projects that the global economy may be approaching a soft landing but recognized that future growth is expected to be low by historical standards, reflecting still high borrowing costs, a withdrawal of fiscal support, weak productivity growth, and continued geopolitical tensions. Further, increasing geo-economic fragmentation will weigh on medium term growth, however trade diversification will bring benefits.
ii) Indian Economic Overview
Despite facing headwind from the sluggish global economy, the Indian economy continue to stand out as the fastest growing large economies and there is every sign that this trend will continue in the near to medium term.
According to the National Statistical Office, the Indian economy is projected to grow 7.6% in 2023-24 compared with 7.0% last year. The GDP grew at 8.2% in Apr-Dec compared with 7.3% in the same period a year ago, with GDP growing above 8.0% in all first three quarters of 2023-24, the first such instance since 2016-17.
The GDP growth in Oct-Dec rose to a six-quarter high of 8.4%, supported by increased investment and government consumption. This is the highest quarterly growth in almost six years if one leaves out the statistical aberrations due to COVID pandemic.
Indias composite purchasing managers index (PMI) stood at 60.6 in February, well above the global average of 52.1, indicating expansion. Inflation has remained within the Reserve Bank of Indias (RBI) target range, and financial conditions have remained accommodative.
Domestic credit issuance to the commercial sector grew by 14 percent year-on-year (YoY) in December 2023, with financial soundness indicators showing improvement. Foreign reserves increased by 8 percent in the year to January 2024.
The supply chain disruptions caused due to COVID and Russia-Ukraine conflict has opened up opportunities for India to build capabilities. True to its vision of Atmanirbhar Bharat, the government in February approved setting up three semiconductor units at Dholera and Sanand in Gujarat and Morigaon in Assam at a total investment of 1.26 lakh crore. This is in addition to the US $2.75-billion semiconductor facility, which is already coming up at Sanand.
The focus of the Interim Budget for 2024-25 has been on fiscal consolidation. The Budget has projected an accelerated reduction of fiscal deficit to 5.8% of GDP in 2023-24 and 5.1% of GDP in 2024-25, while continuing its focus on capital expenditure. The government, which has nearly tripled its capital expenditure in four years, is now aiming a 17% growth in 2024-25 to 11.11 lakh crore. With this, capital expenditure as a percentage of GDP is projected to double to 3.4% in 2024-25 from 1.7% in 2019-20, pointing to the qualitative improvement in the Indian governments finances.
The Budget has promised the next generation reforms to make India a developed nation by 2047, the 100th anniversary of Indias Independence. As a first step, the Budget has allocated 75,000 crore as 50-year interest-free loans for milestone- linked reforms in states.
Outlook
The finance ministry has projected India to become the third-largest economy in the world, with a GDP of US $5 trillion by 20271 from fifth largest currently. Indias sound macroeconomic fundamentals will allow the economy to move to a higher growth path in the coming years despite stuttering global economy. The over 8.0% growth in the first three quarters of 2023-24 is a proof of that. The Reserve Bank of India has projected the Indian economy to grow 7.0% in 2024-25 with quarterly growth rates ranging from 6.9-7.1%.
Indias appeal as a destination for investments has grown stronger and more sustainable because of the current period of global unpredictability and volatility, and the record amounts of money raised by India-focused funds which are evidence of investor faith in the "Invest in India" narrative.
:. Industry
i. Oil and Gas Industry:
a. Global Market:
The global oil demand in 2024 is projected at a record 103.2 million bpd from 101.8 million bpd in 2023. Global supply in 2024 is forecast to increase 800,000 bpd to 102.9 million bpd. The output of OPEC+ is projected to decline by 810,000 bpd in 2024 due to continued curbs by the bloc, while non-OPEC+ production is seen rising by 1.6 million bpd. The growth in global oil demand seems to be returning to its historical trend from the post-pandemic surge. According to the International Energy Agency2, the growth in global oil demand is projected to slow down to 1.3 million barrels per day in 2024 from 2.3 million bpd in 2023, mainly on account of the economic slowdown, efficiency gains and the surge in electric vehicle sales. The growth in demand will continue to be driven by non-OECD countries, especially India, China and Brazil.
The pandemic, the subsequent global economic slowdown, Russia-Ukraine and Israel-Palestine wars, and shift to electric vehicles have continued to affect the market. The war between Russia and Ukraine, which started in February 2022, is still not showing any signs of ending. The hostilities have disrupted the supply chain for the oil and gas industry as Russia is the third largest oil producer in the world after the US and Saudi Arabia. The disruptions in trade routes due to attacks on shipping lanes in the Red Sea have added to the uncertainties. Crude oil prices have risen as ships have been taking the longer route around Cape of Good Hope to avoid Red Sea. The longer route also meant increased bunkering or higher demand for oil from shipping industry. The disruptions have pushed up global oil inventories by 47.1 million barrels, or 1.6 million barrels per day in February 2024, as offshore stocks rose sharply as Red Sea disruptions tied up significant volumes of oil on water. Crude prices have steadily strengthened since December as continued Middle Eastern hostilities and attacks on shipping caused vessel diversions and delays in supply to Europe. Brent crude oil averaged US $83.48 per barrel3 in February 2024 compared with US $77.63 in December 2023.
Going forward, efficiency gains and rising electric vehicle sales will slowly start chipping away demand. According to S&P Global Mobility4 sales of battery electric passenger vehicles is projected to rise to 13.3 million units worldwide in 2024, accounting for 16.2% of global passenger vehicle sales. In 2023, the estimated sales were 9.6 million, accounting for 12.0% of the market share.
b. Indian market:
Healthy economic expansion, combined with dynamic population, urbanisation and industrialisation growth, will see Indias role in global oil markets rapidly increase towards 2030, with significant implications for its oil trade balances, climate ambitions and energy security goals. As energy transitions gather pace and Chinas economy shifts gear towards a less energy-intensive phase, India is expected to assume the position as the worlds largest source of oil demand growth this decade.
India, the third largest consumer of oil in the world behind the US and China, imports over 85% of its oil requirements. IEA has projected Indias oil demand to increase by almost 1.2 million bpd to reach 6.6 million bpd by 2030. According to IEA, between 2023 and 2030, India will account for more than one-third of the projected 3.2 million bpd global gains.
India imported5 US $113.66 bln worth of crude in Apr 2023-Jan 2024, down 16.0% from the same period last year. Including petroleum products, the total import bill was at US $145.73 billion in this period. The decline has been primarily on account of relatively lower crude oil prices this year. The Indian crude basket averaged US $82.42 per barrel in Apr 2023-Jan 2024, down 14.2% from the same period last year.
Russia has become the top supplier of crude to India in 2023-24 thanks to the firm and independent foreign policy of India and the ability to negotiate large discounts from them. Indias crude oil imports from Russia rose 64.5% to US $38.93 billion in Apr- Jan, while imports from all other major importers declined sharply during the year. Russias share in Indias crude oil imports nearly doubled in 2023-24, accounted for 34.2% of total crude oil imports in Apr-Jan compared with 17.5% a year ago. Iraq and Saudi Arabia continued to be the second and third largest importers of crude to India. In volume terms, India imported6 194.57 million tonnes of crude oil in Apr-Jan, up 1.1% from a year ago.
Though India heavily depends on imports, it is also a key exporter of petroleum products. However, due to the global slowdown and the relatively lower prices, Indias petroleum product exports contracted 13.7% to US $70.1 billion7 in Apr 2023-Jan 2024. Indias petroleum product exports accounts for almost half of Indias total petroleum import bill.
Indias domestic crude oil production has been steadily declining. In Apr-Jan crude oil production8 contracted 0.2% compared with a 1.3% decline in the same period of last year. Domestic natural gas production, however, has improved in the last couple of years. In Apr-Jan, natural gas production rose 5.6% compared with 1.4% growth in the same period of the previous year.
Government Initiatives
Given the impact of crude oil on Indias balance of trade, the government has been adopting a multi-pronged strategy to improve energy security, including increasing domestic production, promoting energy efficiency and conservation, giving thrust to promoting green and other alternate sources of energy.
The government has taken many steps to reduce the countrys oil import dependency through process improvements and various policies under Production Sharing Contract regime, Discovered Small Field Policy, Hydrocarbon Exploration and Licensing Policy. The government has also provided functional freedom to public sector oil companies and encouraged wider private sector participation by streamlining approval processes including digital single window mechanism.
Cutting oil imports is a key goal of the government. It promotes electric mobility, biofuels, and other alternative fuels for transportation and industries to curb crude imports. The government has also taken steps to increase Indian output and has boosted efforts to raise production by making exploration and production contracts more attractive. India has recently opened large areas for oil and gas exploration. Crude oil imports will not decrease significantly until there is more use of electric mobility and biofuels with conventional fuels in the country.
The government has launched a National Biofuel Policy to boost availability of biofuels in the country and use of alternative clean fuels like ethanol, bio-diesel and bio-CNG through schemes for Ethanol Blending, Bio-diesel blending and Sustainable Alternative Towards Affordable Transportation. The country has already achieved the target of 12% average blending of ethanol in petrol under Ethanol Blended Petrol Programme and has saved approximately 5.09 billion litres of petrol in 2022-23 alone.
India allows 100% foreign direct investment, through automatic route, in exploration of oil and natural gas fields, infrastructure related to product pipelines, LNG regasification and marketing of petroleum products and natural gas.
ii. Water Industry
a. Global market
According to the United Nations World Water Development Report9, approximately 2 billion people worldwide lack access to clean and safe drinking water, while about 3.6 billion people lack adequate sanitation services. Ensuring access to clean water and sanitation is not only essential for individual health but also crucial for economic development and growth. Increasing investments in the water sector is, therefore, imperative for the progress of countries and regions.
The UN World Water Development Report 2023 highlights that global water usage has been steadily increasing by about 1% per year over the last four decades. This trend is expected to continue until 2050, driven by factors such as population growth, socio-economic development, and shifting consumption patterns. Most of this rise is observed in middle-income and lower-income countries. The issue of water scarcity is exacerbated by the localised impact of physical water stress and the proliferation of freshwater pollution. These challenges pose significant threats to communities worldwide and necessitate urgent action to ensure sustainable water management practices.
Because of climate change, regions traditionally abundant in water, such as Central Africa, East Asia, and parts of South America, are expected to experience increased seasonal water scarcity. Simultaneously, areas already grappling with water shortages, such as West Asia and the Sahel in Africa, will face more water challenges.
All countries, irrespective of income level, are confronting risks associated with water quality. Statistics reveal that, on average, 10% of the global population resides in countries grappling with high or critical water stress. Low-income nations often struggle with poor ambient water quality due to insufficient wastewater treatment infrastructure, whereas higher- income countries contend with agricultural runoff as a major issue.
Despite these challenges, data on water quality remain sparse, primarily due to inadequate monitoring and reporting capacities. The scarcity of data is particularly pronounced in many of the least developed countries across Asia and Africa.
According to a report by the World Health Organization10, 1.8 billion people have gained access to basic drinking water services since 2000, but there are vast inequalities in the accessibility, availability and quality of these services. It is estimated that 1 in 10 people, that is 785 million, still lack basic services, including the 144 million who drink untreated surface water. The data shows that 8 out of 10 people lack even basic drinking water service live in rural areas. At the current rate of progress, the world will reach 81% coverage by 2030, missing the target and leaving 1.6 billion people without safely managed drinking water supplies.
The situation is gradually becoming so grave that in some developing and least developed countries taps will run dry. According to developers of a new satellite early warning system for the worlds 500,000 dams,11 shrinking reservoirs in India, Morocco, Iraq, and Spain could trigger the next "day zero" water crisis.
Global warming has further aggravated this situation by directly affecting the link between water and climate change. Unpredictable rainfall, melting glaciers, rising sea levels, droughts, and floods are all consequences of climate change. Rising temperatures disrupt precipitation patterns and the entire water cycle, aggravating both water scarcity and water-related hazards.
b. Indian market
India has 18% of the worlds population, but only 4% of its water resources12, making it among the most water-stressed in the world. Indias dependence on an increasingly erratic monsoon for its water requirements increases the challenge. Climate change is likely to exacerbate this pressure on water resources, even as the frequency and intensity on floods and droughts in the country increases.
Five of the worlds 20 largest cities under water stress are in India. Average per capita water availability in India, which is already be categorised water stressed, is expected to reduce further to 1341m3 by 2025 and 1140m3 by 2050, close to the official water scarcity threshold. According to a NITI Aayog report India is at 120th position amongst 122 countries in the water quality index, with nearly 70% of water being contaminated13. According to a NITI Aayog, India will need investments of 20 lakh crore to bridge the expected water supply gap by 2030.
The situation gets aggravated by rapid urbanisation and industrialisation, leading to the overexploitation of water bodies, poor water management, pollution, and climate change. The rapid growth of urban areas and industries has resulted in the overexploitation of both surface and groundwater resources. Additionally, inadequate management of water bodies and outdated irrigation techniques worsen the crisis.
Erratic rainfall patterns, rising temperatures, and melting glaciers further strain water resources, causing droughts and floods, especially in vulnerable regions. The repercussions of this crisis are far-reaching, affecting human health, economic growth, social stability, and environmental integrity.
Interstate disputes over river water heighten tensions in India, fuelling conflicts between communities and, in some cases, leading to violence.
Both central and state governments are implementing a series of measures, including promoting water conservation, policy reforms, investing in water-related infrastructure, increasing community participation, and building climate resilience.
Government initiatives
The Department of Drinking Water and Sanitation, under the Ministry of Jal Shakti, has been working towards realising the mission of creating a Swachh Sujal nation. The departments flagship schemes, the Jal Jeevan Mission, aims to provide safe and adequate drinking water to all rural households through individual household tap connections. The departments Swachh Bharat Mission Grameen aims to ensure universal sanitation coverage, sustain open defecation free behaviours, leave no one behind, and focus on interventions for the safe management of solid and liquid waste in villages, along with visual cleanliness.
Jal Jeevan Mission, launched in August 2019, is a transformative initiative dedicated to providing safe and ample drinking water to all rural households. Over the past four years, the mission has achieved significant milestones, reaching 14.62 crore, or 75.7% of the households with tap water connections and profoundly impacting rural communities14. In 2023, the mission surpassed several milestones, progressing from 11 crore connections at the beginning of the year to over nearly 14 crore tap connections by the end of the year. In 2023-24, the government has released 69,886 crore to 25 eligible states and 5 union territories for the implementation of Jal Jeevan Mission.
Union Budget FY25
In the Interim Budget for 2024-25, allocations for the Department of Drinking Water and Sanitation have been increased to 77,390.68 crore for 2024-25. Of the total allocation, 90% or 69,926.65 crore is for Jal Jeevan Mission and National Rural Drinking Water Programme.
iii. Steel Industry a. Global Market
Steel, which is dubbed as the worlds greatest alloy, is the backbone of most key sectors, including infrastructure and manufacturing. Over the years, experts and industries worked on new alloys like aluminium and titanium, but they were not able to replace steel due to the abundance of its raw material - iron ore.
While most countries are trying to develop technologies to manufacture high-grade steel, some have been able to corner the major chunk of the market. China has emerged as the worlds largest producer and consumer of steel, fuelling demand with its rapid urbanisation and infrastructure development. India is the second largest producer of steel, followed by Japan and the US.
Despite its resilience and adaptability, the global steel industry faces a plethora of challenges and that includes overcapacity in some countries such as China that is leading to pricing pressures, trade disputes, and market distortions. Unilateral decisions by certain countries or blocs will also impact the sector adversely in coming years. A case in point is European Unions decision to impose carbon tax on products that emit carbon dioxide or non-environment friendly gases. The tax on these goods will come into force from January 2026. The UK is also considering a similar move.
According to a report of the Global Trade Research Initiative, from January 1, 2026, the EU will start collecting the carbon tax, which is estimated to be 20-35% tariff equivalent. This is far higher than the EUs average import tariff of 2.2% for manufactured products. In 2022, 27% of Indias exports of iron ore pellets, iron, steel, and aluminium products valued at US $8.2 billion went to the EU.
Top 10 Crude Steel Producing Countries
| RANK | COUNTRY | 2023 | % Yr-on-yr change |
| 1 | CHINA | 1019.1 | 0.0 |
| 2 | INDIA | 140.2 | 11.8 |
| 3 | JAPAN | 87.0 | (-)2.5 |
| 4 | US | 80.7 | 0.2 |
| 5 | RUSSIA (e) | 75.8 | 5.6 |
| 6 | SOUTH KOREA | 66.7 | 1.3 |
| 7 | GERMANY | 35.4 | (-)3.9 |
| 8 | TURKIYE | 33.7 | (-)4.0 |
| 9 | BRAZIL | 31.9 | (-)6.5 |
| 10 | IRAN | 31.1 | 1.8 |
Outlook:
The increase in interest rates by global central banks to tame inflation has led to an uncertain global economic outlook, which has had a ripple effect on the steel industry. However, a healthy growth in developing countries such as India and Brazil, and hints of reversal in monetary policy stance by many central banks provide a silver lining for the sector, amid further headwinds from sluggish growth in European countries and slow economic recovery in China.
According to the World Steel Associations15 short range outlook in October global steel demand is likely to grow 1.9% in 2024 to reach 1,849.1 million tonnes from estimated 1,814.5 million tonnes in 2023. This marks an upgrade from the associations April outlook, which predicted global steel demand to rise 1.7% in 2024. The global crude steel production in 2023 was 1,888.2 million tonnes, almost unchanged from 1,888.7 million tonnes in 2022.
According to a report by the Joint Plant Committee of the Ministry of Steel, the global manufacturing sector showed signs of stabilisation at the start of 202416. After contracting for seven successive months, production volumes edged higher for the first time since May 2023 as new order intakes fell at the slowest rate in the current 19-month downturn as output rose in China, India, and Brazil.
Crude steel output in China, which accounts for about 55% of the worlds crude steel production, was unchanged at 1,019.1 million tonne in 2023. According to S&P Global, Chinese steel demand may continue to remain under pressure in 2024 due to capacity expansion, as steelmakers plan to bring 82.2 million tonnes of pig iron capacity and 114 million tonnes of crude steel capacity on stream.
India, the worlds second largest producer, recorded a 12% growth in crude steel output in 2023 at 140.2 million tonnes year. India accounted for about 7.5% of the worlds crude steel production in 2023. With a production of 87.0 million tonnes in 2023, Japan was the third largest producer of the product and contributed 4.7% of world crude steel production in 2023. The year 2023 has been mixed for global steel firms. Fingers are crossed on 2024 as overcapacity in China is making global steel firms nervous, while likely loosening of monetary policies may provide a fillip.
b. Indian Market
According to market intelligence firm BigMint, Indias steel demand is expected to grow at a compounded annual growth rate of 7% to touch 190 million tonnes by 2030. The demand will be largely fuelled by the construction and infrastructure sectors, which contribute 60-65% to the sales. Healthy economic growth and focus of the central government on infrastructure projects adds to the buoyant outlook for the steel sector in the country.
Indias economic growth accelerated to 8.4% in Oct-Dec of 2023-24, mainly on the back of robust growth in manufacturing and construction sectors. The buoyant economic growth and the governments focus on capital expenditure is boosting the sector. The Interim Budget projected a capital spending outlay of 11.11 lakh crore in 2024-25, which is nearly three and a half times of what it was in 2019-20.
The numbers suggest a rosy picture for the steel sector. Construction, a key driver of demand for steel is growing at a healthy rate. According to Invest India, the governments investment facilitation agency, the construction Industry in India is expected to reach US $1.4 trillion by 2025.
India remains a bright spot in an otherwise gloomy global steel industry. According to the World Steel Association, Indias steel demand is projected to grow at a healthy 7.7% in 2024 notwithstanding a high base. Indias steel demand grew an 8.6% in 2023 and 9.3% in 2022.
India crude steel production in last five years
| Year | Production in million tonnes |
| 2019 | 111.4 |
| 2020 | 100.3 |
| 2021 | 118.2 |
| 2022 | 125.4 |
| 2023 | 140.7 |
Government initiatives
The steel sector got a major boost with the government including specialty steel under the Production Linked Incentive Scheme with an outlay of 6,322 crore.
The Ministry of Steel has also embarked on several initiatives aimed at decarbonising the steel sector in line with Indias commitment to achieving net-zero emissions, as outlined in COP-26. The steel sector in India has been embracing the adoption of best available technologies from around the world in its modernisation and expansion projects, underscoring the industrys commitment to reduce its carbon footprint and transition to sustainable practices.
Additionally, the Ministry of New and Renewable Energy has introduced a National Green Mission focused on the production and utilisation of green hydrogen.
Takeaway for steel sector from Union Budget 2024-25
• The funds for capital expenditure were raised to 11.11 trillion, up 17% from the preceding year and 3.4% of GDP
• Coal gasification and liquification capacity of 100 million tonnes by 2030
• Three economic rail corridors
• Two crore houses to be built under government scheme
iv. Pipe Industry
Pipes are critical for supplying anything that can flow including liquid, gas, and amorphous solids. Thus, pipes find their applications in both, industrial and non-industrial sectors. The application in non-industrial sectors includes the use of pipes in supplying wastewater to municipal wastewater treatment plants, public sewage, community water pumps, gas pipelines, pipelines for irrigation, plumbing in homes, HVAC systems in buildings, and various others. For instance, in July 2022, China started a project to upgrade old municipal gas pipelines in Heilongjiang province for higher safety.
The pipes market is primarily driven by various factors such as rise in the number of new residential and commercial buildings, development of water supply pipelines, increase in the number of wastewater treatment facilities, public agriculture irrigation systems, and other infrastructure in developing economies. In addition, rise in the number of industrial facilities including food and beverages, chemical and petrochemicals, pharmaceuticals, and other industrial facilities globally, also positively affects the pipes market growth.
Moreover, the Jal Jeewan Mission of the government of India aims at providing safe and sufficient drinking water to all households in India by 2024. Under this program, the government is expected to lay thousands of kilometers of pipelines to each individual house. Similarly, in August 2020, the government of Vietnam unveiled that it would construct the countrys largest wastewater treatment plant in Ho Chi Minh City. This wastewater treatment plant is anticipated to treating 480,000 cubic meters of water/day.
In addition, to address the water shortage problems in many countries, governments of those respective countries are upgrading and expanding their water transportation infrastructure. For instance, the Mexico government has been upgrading
its water infrastructure, to bring water from the central part of the country to the parts facing water shortages.
Pipes are used for a variety of purposes such as supplying steam, chemicals, oil & gas, hot or cold process water, and various others, in industrial applications. For instance, the government of India is upgrading and expanding its gas pipeline network across the country, in pursuit to increase the contribution of gas in its total energy production from 6% in the financial year 2019 to 15% in the financial year 2030. Currently, India has a gas pipeline grid of 16,905 km, which needs to be increased to 27,000 km. Moreover, in 2020, the U.S. constructed two major oil pipelines in the country. All such projects that indicate increase in high demand for pipes in the industrial and non-industrial sectors are driving the market growth. However, the fluctuating cost of raw materials used for manufacturing pipes is expected to restrain the market growth. Even if the manufacturer does not increase the price, it is expected to affect the profitability of the company involved in making pipes and their components. Moreover, technological development in the pipes industry is a major pipes market opportunity and is expected to provide lucrative opportunities for the key market players.
Pipe market and outlook
Consulting firm Lucintel has raised its projection on global industrial pipe market to grow at a CAGR of 4.1% during 2024 to 2030, up 3.2% from 2023 to 202817. In its latest report, the firm anticipates the market to reach US $52.5 billion by 2030. This upward revision is attributed to several factors, including the increasing construction of new pipelines, replacement of aging pipelines, urbanisation rates, and infrastructure development, which collectively drive optimism in the pipe sector.
Furthermore, experts highlight the burgeoning opportunities in the gas sector, which is poised to compensate for the relatively stagnant oil segment. This trend is expected to sustain petrochemicals as the primary driver of demand for industrial pipes in the foreseeable future. Lucintel underscores the growing adoption of premium and technologically advanced pipes, coupled with a heightened focus on pipe strength and durability.
Steel pipes are projected to remain highly sought-after, primarily due to their increased usage in power generation, as well as the oil and gas industries. Lucintel also foresees the petrochemical sector retaining its position as the largest end-use industry, driven by investments in new ventures and the upgrading of existing petrochemical facilities. Moreover, the continued rise in infrastructure development, urbanisation, and economic stimulus measures is expected to bolster the industrial pipe market in the Asia-Pacific region, making it the largest growth market.
Experts point towards emerging areas for value-added pipes, notably hydrogen and carbon capture pipelines. In the US, significant progress has been made in laying hydrogen fuel pipelines, with approximately 1600 km already established, and is expected to surge exponentially. Similarly, India has ambitious targets for the sector under the National Green Hydrogen Mission, with envisaged investments totalling 8 lakh crore.
However, it is essential to recognise that the pipe market operates cyclically, with the majority of orders being project-based. Therefore, long-term predictions should be approached with caution.
Indian Pipe Industry
The Indian pipe industry is a dynamic sector, driven by growing demand from infrastructure, oil and gas, power, and water and sanitation industries. While the market shows promise with a projected growth rate, it faces challenges due to inflation from the Ukraine conflict and the lingering impact of the pandemic, raising raw material and energy costs for end-users.
The pipes market is primarily driven by various factors such as rise in the number of new residential and commercial buildings, development of water supply pipelines, increase in the number of wastewater treatment facilities, public agriculture irrigation systems, and other infrastructure in developing economies. In addition, rise in the number of industrial facilities including food and beverages, chemical and petrochemicals, pharmaceuticals, and other industrial facilities globally, also positively affects the pipes market growth.
In India, while the upstream oil and gas sector has experienced some stagnation, the downstream segment continues to propel the pipe industry forward. The expansion of piped gas distribution networks to more cities has been a significant driver, with coverage expanding over tenfold to encompass 630 cities over the past decade.
India Oil and Gas Pipeline Market
India has an extensive network of pipelines in both natural gas and crude oil sectors which includes several cross-country pipelines that cater to demand from various parts of India including remote areas such as Jammu & Kashmir, Assam, Uttarakhand, etc. The rising energy needs have led to increased investments in the sector for expansion of existing networks along with setting up new ones which will be beneficial for growth of the market going forward. Moreover, increasing investments into renewable sources are also expected to create additional opportunities in this market landscape in next few years. he India oil and gas pipeline market is experiencing substantial growth as the country seeks to expand its energy infrastructure to meet the rising energy demand. The construction of new pipelines and the modernization of existing ones are driven by the need to enhance energy transportation and distribution across the nation.
Pipeline network demand in Water Sector
Additionally, the water sector, both for irrigation and drinking water purposes, is fuelling growth in the domestic pipe sector. Initiatives such as the Jal Jeevan Mission, aimed at providing drinking water connections to all rural households by 2024, and ambitious targets for irrigation under the Pradhan Mantri Krishi Sinchayee Yojana, are contributing factors to the sectors growth trajectory. The governments Smart City project is also a boost to the industry.
In recent years, the Indian pipe industry has witnessed significant growth, which is being driven by a number of factors, including:
• Increasing infrastructure development: The Indian government is investing heavily in infrastructure development, which is creating a strong demand for pipes for various projects, such as roads, bridges, and railways.
• Rising oil and gas consumption: Indias oil and gas consumption is growing steadily, which is driving demand for pipes for upstream and downstream operations.
• Growing power demand: Indias power demand is also growing rapidly, which is creating a demand for pipes for power transmission and distribution projects.
• Increasing urbanization: Indias urbanization is leading to a growing demand for pipes for water supply and sanitation projects.
Market Drivers of the market
The India oil and gas pipeline market is experiencing substantial growth as the country seeks to expand its energy infrastructure to meet the rising energy demand. The construction of new pipelines and the modernization of existing ones are driven by the need to enhance energy transportation and distribution across the nation.
The Indian pipe industry is a promising sector with a bright future. The industry is well-positioned to benefit from the growing demand for pipes from various end-user industries and is expected to continue to grow in the coming years.
3. Company and business overview
Jindal SAW Ltd. ("the Company") is a global market leader in the coated and bare pipe industry. It has a successful track record of delivering one of the widest ranges of pipe products to all the major clients in India and across the globe. Its offerings include welded pipes above 16" in diameter for water and oil & gas sectors, rust free iron pipes upto 1.2 meter diameter especially for water and waste water sector, non-welded pipes & tubes for industrial sector, welded and non-welded pipes & tubes manufactured from different grades of stainless stell applied in varied sectors. The company also has a small presence in smaller diameter non-iron pipes to complete its full range product offering. It produces and sell pellets as well.
What makes the Company a total pipe solution provider is varieties of anti-corrosion and protective coating facilities it offers, along with the necessary ancillaries such as fittings, bends, flanges etc.
The Companys manufacturing facilities are accredited and fully compliant with the most rigorous global standards and quality systems. With its diverse product range, the Company can meet the complete spectrum of pipe needs across various sectors including energy transportation, water and wastewater transportation, automobile, industrial applications, and specialised sectors such as nuclear power.
Due to its successful track record for a period close to four decades, diversified product portfolio serviced from multi-locational manufacturing facilities, well-established clientele, and robust technological competitiveness, the Company has established itself as a reliable producer and supplier in all the products being dealt by it.
The Companys business model exhibits a high degree of diversification across key regions, markets, products, sectors, and clientele. This provides substantial resilience against diverse risks, enabling the Company to operate efficiently and effectively even amidst challenging economic and geopolitical circumstances.
The manufacturing facilities in India are located in Uttar Pradesh, Gujarat, Maharashtra, Andhra Pradesh, Karnataka, Rajasthan, and Madhya Pradesh. The well-distributed strategic locations of the plants help the Company to stay closer to the customers. It also has manufacturing facilities in the US and the UAE through it subsidiaries and associates.
With the completion of Sathavahana Ispat Ltds acquisition in April 2023, the Company has set its footprint in southern region with a capacity to make rust free iron pipes, pig iron with captive coke oven and power plant. This acquisition along with the Companys rust free iron pipe manufacturing facilities in Mundra (Gujarat) and Abu Dhabi (United Arab Emirates) has made Jindal SAW as one of the largest producers of these pipes, globally.
The Company also operates low-grade iron ore mines in Rajasthan, the only ones in northern India. The mines are on 50-year mining lease for a low-grade iron ore mine spread out over 1,989 Hectares with estimated reserves of nearly 180 million tonnes. The Company has perfected the capabilities of producing high-grade iron pellets through the beneficiation and palletisation process. The pellets are sold in both the domestica and external markets.
The Company identifies pipes and pellets as its core business. With this objective, the Company has not only exited/demerged/de- subsidiarised/re-organised its non-core businesses, it is also on the verge of completing merger of some domestic subsidiaries. This will help achieve delayering, consolidation of business, operational synergies, pooling of financial, managerial, technical, and human resources, thereby creating stronger base for future growth and value accretion for the stakeholders. Also, it offers customers a single base for all kinds of products.
The Company has a philosophy of focusing on value added products and catering to high quality expectations of major clients in India and across the globe. All its manufacturing capabilities are accredited by higher level of quality systems. The Company is also building an IT platform to support its activities across the globe.
Demonstrating a strong commitment to sustainability and social responsibility, Jindal SAW has initiated various initiatives aimed at reducing its environmental footprint and fostering community development.
Acquisition and Merger of Sathavahana Ispat Limited under Insolvency and Bankruptcy Code, 2016
In the IBC proceedings of Sathavahana Ispat Limited (SIL) before the Honble National Company Law Tribunal, Hyderabad Bench (NCLT), the Company participated by submission of a Resolution Plan ("Resolution Plan") for its acquisition. The Resolution Plan was accepted, and the Company was declared as the Successful Resolution Applicant ("SRA") for acquisition of SIL by NCLT vide its order dated 31st March 2023 under Section 31 of the Insolvency and Bankruptcy Code, 2016 (the "IBC"). Pursuant to the approval and subsequent implementation of the said Resolution Plan, SIL stands merged with Jindal SAW Ltd. with effect from 26th April 2023.
4. Key Subsidiaries
The Company describes its core business as pipes and pellets. As part of corporate restructuring, it has exited several non- core companies, allowing the Company to solidify its position as a market leader in the core business and improve its financial performance. The Company currently runs a small number of subsidiaries, mostly tied to the core business, in India and abroad. The Companys principal operating subsidiaries are listed below:
a. Jindal SAW Gulf LLC, Abu Dhabi, United Arab Emirates
Jindal SAW Gulf LLC is an Abu Dhabi subsidiary of Jindal SAW. It has West Asias first major state-of-the-art integrated facility, producing large-size rust-free Iron Pipes of various sizes. It concentrates on supplying high-quality techno-economic goods and solutions for water transportation and sewage systems throughout the GCC and MENA region. The factory, which has an installed capacity of 300,000 tonnes per year, manufactures rust-free iron pipes in sizes ranging from DN 100 to DN 2200. The UAE facility has received approvals from customers and successfully supplied to nearly all countries within the GCC and MENA regions, and outside, namely Australia, Panama, Singapore, etc. Jindal Saw Gulf has also developed value added products, including double chamber pipes, foam coated pipes, etc to capture premium markets that will drive better profit margins in the long run.
b. Jindal SAW USA LLC
Jindal SAW has a double jointing and coating facility in Baytown, Texas under Jindal SAW USA, LLC, a 100% step-down subsidiary, to serve the North American market. Jindal SAW USA LLC, an ISO 9001: 2015 firm, was founded in 2007. This facility includes rail, road, and barge shipping capabilities within the North American market. The plant has a manufacturing capacity of 5 million square metres per year.
c. Jindal Metals & Alloys Ltd.
Jindal Metals & Alloys Ltd is a market leader in producing High-Quality Precision Stainless Steel Strips and Soft Magnetic Nickel Alloys. It has a large selection of thin and super thin cold rolled strips. Precession Stainless Steel and Nickel Alloys are used in production of textile machinery, clocks, watches, and electrical equipment. The Jindal Groups technical, production, and logistical resources are accessible to Jindal Metals & Alloys Ltd, which is located at Bahadurgarh in Haryana.
d. Jindal ITF Ltd.
Jindal ITF Ltd, a 51% subsidiary of Jindal SAW, is in the business of transhipment and waterborne transportation. Jindal ITF has entered contracts for providing its services to clients such as NTPC. Due to disputes on contractual terms, Jindal ITF has entered arbitration with NTPC. On January 27, 2019, the Arbitral Tribunal pronounced the final award in favour of Jindal ITF, allowing various claims to the tune of 1,891 crore plus interest and applicable taxes. At present, NTPC and Jindal ITF have filed petitions which are being heard by the High Court of Delhi. The proceedings have been delayed on account of COVID. Jindal ITF is confident that the matter will be settled with favourable outcome in its favour.
e. JV with Hunting Energy Services Pte Ltd., Singapore
The Company has entered a Joint Venture with Hunting Energy Services Pte Ltd, Singapore ("Hunting") wherein it holds 51% shareholding & balance by Hunting. This state-of-the-art facility is a Centre of Excellence for cutting all kinds of Premium Threads on OCTG & Accessories and is a first-of-its kind full-fledged manufacturing set up in India which is co-located with the Pipe manufacturing facility of Jindal SAW at Nashik, Maharashtra.
This manufacturing facility boasts cutting-edge machinery, benchmarked against global standards. It also features a high degree of automation and sophisticated testing capabilities, ensuring the production of top-quality products to meet the stringent standards of the oil and gas industry especially Deep Drilling Operations.
The facility is poised to attain an annual threading capacity of 70000+ Joints of Casings, Tubings, Accessories & Weld-On- Connectors covering the full spectrum of range from 2-7/8 to 36.
Jindal Hunting Energy Services Ltd. is also licenced by Oil State Industries (OSI) to threaded Patented OSI threads on Connectors thereby making Jindal SAW the only Indian company to provide Weld-On-Connector Casings to Indian Market with 100% Indian Manufactured product.
It has also become the first company to have such a manufacturing facility in India which will offer premium connections for Oil Country Tubular Goods (OCTG) from India to different regions of the world. It would also serve as a substitute for imports thereby enabling India to become self-reliant in this market. The joint venture is in line with the goal of the nation to become Atmanirbhar Bharat.
f. Others
With an objective to achieve consolidation of business, operational synergies, pooling of financial, managerial, technical and human resources, thereby creating stronger base for future growth and value accretion for the stakeholders, the Board of Jindal SAW Limited proposed a scheme of amalgamation envisaging the merger of Jindal Quality Tubular Limited ("JQTL") a subsidiary, Jindal Tubular (India) Limited ("JTIL"), a subsidiary and Jindal Fittings Limited ("JFL") an associate of the Company ("Scheme") with the Company.
The Honble, Allahabad Bench of National Company Law Tribunal ("NCLT") vide its order dated 21st March 2024 approved the above Scheme. The same had become effective from 29th March 2024. Accordingly, JQTL, JTIL and JFL stand merged with Jindal SAW Ltd. with effect from 29th March 2024.
5. Business Strategy
Jindal SAW Ltd. is a multiproduct and multi-locational company. Over a period, the Company has increased its footprints in core business across the globe and at present we have significant presence in US, Middle East and Europe through subsidiaries & associates. We have our direct presence for marketing and services in the major markets of the world. The group has moved strategically into new product segments over the last couple of years which has helped it to create synergy in its operations. Our business model provides us the opportunity to explore the markets of diversified products and industry with new products and widespread customer base which is also helping us to minimize the industry and product specific risks as well as the customer related exposures. This model has helped us in the past and a part of management strategy to provide the consistency in business growth and its earnings. Our strategy to focus on core business and expanding the presence by offering more and more product range in niche segment, has started yielding results and further guiding us to consolidate the market leadership position with strong profitability to maximize the returns of stakeholders.
Our business strategy primarily includes:
a. Expanding our comprehensive range of products and developing new high-value niche products designed to meet the needs of customers operating in increasingly challenging environments.
b. Optimizing the cost by rationalizing operations and resources and make operations more competitive.
c. Explore the opportunities with the available resources through strategic collaborations with the global leaders, more innovations, new product range etc. which can help in increasing the utilisation of available resources.
d. Building and maintaining relationship with its clients, spanning diverse business sectors worldwide, both in public and private domains. The Companys clientele consists of renowned entities in the oil and gas, water, automobile, chemical, food, pharmaceutical and nuclear industries etc. The Companys commitment to superior product quality and punctual deliveries positions it as the preferred provider within these sectors.
e. In recent years, the Company has shifted its focus towards value-added products to differentiate itself from competitors and capitalise on opportunities in the steel pipe market. By prioritising value-added offerings, the Company has distinguished itself in the competitive steel pipe market. These products have not only expanded the Companys customer base but also facilitated its entry into new markets, particularly in offshore oil and gas drilling, where there is a substantial demand for specialised products.
f. Contribution to Atmanirbhar Bharat Mission: The Atmanirbhar Bharat Mission embodies Prime Minister Narendra Modis vision for a new India. It aims to achieve self-reliance in both the economy and infrastructure sectors by promoting Indian goods in the global supply chain markets and help the country achieve self-reliance. It encompasses themes such as Local for Global: Make in India for the World and Vocal for Local. The campaign advocates for import substitution and urges businesses to develop manufacturing capabilities domestically. The Company has taken effective steps to capitalise on this vision as it transitions towards value-added products and serves as a crucial supplier for items that are typically imported.
6. SWOT Analysis
• Strengths
Our main competitive strengths include:
a) Well diversified business model catering to oil & gas, water and other industrial application.
b) A product portfolio and a business model providing a hedge to deal with various risks.
c) Presence through global pipe production facilities, finishing and distribution network to provide the product at doorstep of end user.
d) Diversified product portfolio helping to cater the demand of customer at one place.
e) Diversified customer base and historic relationships with major international companies around the world with proximity to customers.
f) Maintaining highest standard of governance helping us to boost the confidence of all the stakeholders.
g) Strong financial conditions and working towards value enhancement for the stakeholder.
• Weakness
a) The Company may face challenges from cheaper imports, particularly from China, which could exert pressure on its revenue and profitability.
b) The industrys nature demands significant working capital, posing a challenge for companies to secure necessary funds. Factors such as limited access to credit, high-interest rates, and complex lending processes further exacerbate this issue.
c) Being a significant exporter and importer, the Company is exposed to fluctuations in foreign exchange rates. Despite implementing a natural hedging policy, volatility in foreign exchange markets may still affect the Companys profitability.
• Opportunities
a) New markets are emerging in sectors like hydrogen fuels and carbon-capturing pipelines. The Company has started looking at ways to tap such opportunities.
b) The Indian governments initiatives, such as Made in India and Atmanirbhar Bharat, aim to bolster local production and enhance the competitiveness of Indian industries. In response, the Company has taken steps to develop value-added products within India. These initiatives offer opportunities for Jindal SAW to expand its operations and bolster its market share domestically.
c) In the oil and gas sector, several megatrends present prospects for Jindal SAW. These include offshore exploration and production, shale gas exploration and production, and the digital transformation of the oil and gas industry. Leveraging these trends can potentially benefit the Companys business in this sector.
d) There is a growing global demand for infrastructure development, spanning transportation, water supply, and energy infrastructure. Given its expertise and capabilities, Jindal SAW is well-positioned to capitalise on this trend and further strengthen its position in the market.
e) Government Policies like Production Linked Incentive and Jal Jeevan Mission, targeting development in various sectors like infrastructure, housing and development pose a unique opportunity for Jindal SAW.
• Threats
a) Unexpected circumstances, such as the COVID-19 pandemic, can affect the Companys operations, supply chain, and product demand. The pandemic of COVID-19 has underlined the significance of having a resilient business model that can react to unforeseen occurrences and market changes. Jindal SAWs ability to adapt promptly to the pandemics problems demonstrates the Companys agility and good leadership.
b) In the framework of international trade and foreign investments, geopolitical conflicts can present a threat to the Company business. Geopolitical conflicts can result in trade barriers, taxes, and other trade restrictions, limiting Jindal SAWs capacity to acquire raw materials and export completed goods. Furthermore, geopolitical conflicts might affect international investments and joint ventures, limiting the Companys access to new markets and growth prospects.
c) Indias domestic steel sector is particularly susceptible to lower-cost imports and changes in demand. By lowering their market share, income, and profit margins, less expensive imports may pose a challenge to Jindal SAWs operations. However, Jindal SAW may also take steps to counteract the effects of less expensive imports, including as raising the quality of their goods, streamlining their supply chain, and growing their clientele.
7. Risks and mitigations:
a) Industry and macroeconomic risks: Because the business operates in a volatile industry, its investments and performance are shaped by megatrends in the operating environment. The Companys operations and future performance depend on how
these prevalent patterns affect its capacity to deliver on its commitments. Adverse regulatory or economic conditions in the worldwide market can directly and negatively influence the Companys revenue, earnings, cash position, and outlook.
b) Financial market risks: Financial market volatility can directly influence the Companys operations and balance sheet, as well as its capacity to mobilise appropriate financial resources at the most competitive terms and pricing.
c) Foreign exchange risks: Because its operations span the globe, the Company engages in foreign currency transactions on regular basis. The import of raw materials and other goods, as well as the export of finished pipes and other products, all involves foreign currency transactions. As a result, any changes in foreign exchange rates may have an immediate impact on the Companys operations. To limit the impact of currency volatility, the Company has implemented a hedging policy that is resilient and fulfils evolving regulatory criteria. This is in addition to the natural hedge afforded to the Company by the nature of the business.
d) Risks to direct costs: The Companys margins may be impacted by volatility in the costing and/or utilisation of raw materials, energy, or any other direct expense. The Company closely monitors price movements and implements the necessary strategy or measures to mitigate this risk, such as changing business models. However, a diversified business model of the Company mitigates this risk to a larger extent.
e) Legal risks including those related to tax structure: The Company has a presence in India and other countries through its subsidiaries and associates. The Company need to ensure that it adheres to all legal obligations, including sanctions imposed by any government. Furthermore, being an Indian corporation, the business is subject to a variety of direct and indirect taxes that apply at various phases of the business. The Company has a competent process and mechanism in place to deal with the continuously shifting tax environment, which includes a control framework for current tax risks, a procedure for identifying and reporting new risks, and compliance with the same.
f) Environmental law risks: Because the Company relies on natural resources, some of its business operations may be subject to environmental restrictions, particularly at its production facilities. The expense and compliance associated with such rules can have a direct influence on the Companys day-to-day operations. As a responsible organisation, the business observes all statutory rules and legislation, as well as environmental conventions.
g) Human Resource Risk: The workforces support is critical to the Companys operation and eventual its success. Jindal SAW has suitable systems, processes, and programmes in place to ensure talent recruitment and retention and to nurture a talent pool to drive the organisations future growth.
h) Information technology risks: The Companys interconnected IT platforms provide access to information and data relating to operations and strategy. This can be dangerous if proper protections are not in place. The Company has (a) made considerable expenditures in improving and ensuring security robustness, including safeguards for hardware and software, and (b) built a highly qualified in-house staff to oversee training, implementations, development, and enhancements, among other things.
8. Information technology
Information technology is indispensable for a companys smooth functioning and sustainable efficiency, particularly in todays dynamic technological landscape. To stay ahead in this rapidly evolving environment, the Company has deployed SAP ERP across all its business locations in India, the US, and the United Arab Emirates. Additionally, recognising the evolving needs of modern technologies, the Company is gearing up to implement Artificial Intelligence to enhance accuracy, efficiency, and flexibility within its operations.
The utilisation of SAP ERP has been instrumental in enhancing operational efficiency, leading to almost zero downtime for the Company in 2023-24. This comprehensive system is utilised across various functions including sales, logistics, procurement, production, maintenance, projects, HR, and MIS. A resilient IT infrastructure is crucial for managing and recovering from outages swiftly, thereby ensuring uninterrupted service delivery. The Company has implemented a robust disaster recovery setup to minimise data loss and a continuous monitoring mechanism to prevent potential outages.
Ensuring the security of its IT landscape is paramount for the Company. To mitigate external threats, the Company has adopted advanced security measures including Next Generation Firewall, Virtual Local Area Networks, and Managed Detection and Response solutions. Regular communication is disseminated to all IT users to raise awareness about prevalent threats and best practices for self-safeguarding.
Moreover, the Company hosts its SAP applications on servers co-located at the IBM data centre in Mumbai, ensuring the safety of critical data. In the event of a disruption to the SAP production system, a Disaster Recovery setup at the IBM Data Centre Bengaluru allows for rapid activation of backup systems, enabling seamless business continuity within a short time frame of 3-4 hours. Regular Disaster Recovery drills are conducted to further fortify the systems.
In addition to SAP ERP, the Company has leveraged various applications to digitise different processes such as claims and reimbursements. Furthermore, by utilising Microsoft 365 for email and office tools, the Company ensures the security and resilience of its domains and websites against cyber threats. Through the adoption of cutting-edge technology, the Company continuously evaluates risk performance, fosters employee engagement, and enhances internal system controls, thereby ensuring its IT infrastructure remains robust and future-ready.
9. Human Resources
At Jindal SAW Ltd., the importance of Human Resource has honed with every passing year. The Management believes that employees are the best brand ambassadors who embody the internal culture of the organization guided by our core values of Team Spirit, Openness & Fairness, Commitment to Excellence, and Customer Focus & Care for People. We continually prioritize strengthening the employee-employer relationship many strategies to keep our employees fully absorbed & enthusiastic towards their jobs so that they reinforce positively towards achieving the common goal.
The prominence of transition is very well understood by the organization, it may be in the sense of adopting new interventions by external environment or technologies. We focus on continuous improvement at all levels within the Organization to make the system more robust along with making the policies / practices more employee friendly in line with the external & internal environment by reviewing them regularly and extending benefits to employees at all levels.
We prioritize development of our Human Resource by identifying the necessary competencies required for delivering tangible results and focus on skill development through continuous Training & Development. We promote a combination of technical and behavioural training, job rotations, functional trainings, and exposure to new technologies to facilitate employees capabilities. Recognizing our human resources as our most valuable asset, we have implemented a "Succession Planning" policy to identify potential successors for key roles within the organization and this approach aids in developing a pipeline of qualified individuals.
The organization invests in people through Rewards & Recognition and merit oriented pay revisions through a process "Target Based Performance Management System (TBPMS)", wherein, KRAs of the individuals are clearly identified from the onset of the Assessment year and periodic and fair assessment of the performance delivered is carried out and final review with Rating is sorted at the end of the Assessment Year. This process is also used as an adept device to recognize the "STAR" performers within the organization and also the nuder-performers who require counselling , change in responsibilities or skill enhancement to improve their performance. For employees who may be struggling to meet expectations, we have a Performance Improvement Plan in place to provide guidance and support to help enhance their on-the-job performance.
As a responsible employer, the Women empowerment and safety parameter is kept at a high stature. We have stringent policies in place to prevent any kind of harassment at the workplace, underscoring our commitment to responsible employment practices. Our employees have access to a powerful platform for efficient and prompt grievance redressal. Furthermore, we regularly conduct awareness workshops to promote employee awareness and cultivate a safe and supportive work environment where all female employees can work comfortably and confidently. All the females enjoy a safe and secure working within all our facilities.
The well-being of the their families is also prioritized along with that of employees, by offering comprehensive insurance coverage. We also organize regular medical camps, awareness sessions, and life skills workshops for both employees and their families. These initiatives are aimed at fostering a healthy work-life balance and nurturing an open and caring culture within the organization. We are also constantly working towards improving the quality of life of employees and their families residing within our Companys Townships by extending best possible medical facilities like Health Check-ups for employees and family (on subsidized basis), regular Health Camps, Awareness Talks, Immunization camps at units medical services through fully equipped OHCs at units.. We also provide educational facilities to employees children, create a cordial sociological atmosphere by facilitating celebration of festivals, sports activities and other events together with complete enthusiasm.
The culture of Jindal SAW Ltd. is built on resilience and its core values which can be clearly identified by its lower attrition rate and higher level of satisfaction amongst the employees.
10. Health and Safety
The company understands the importance on health and safety of its employees and the environment it operates within Jindal SAW endeavours to provide a safe, transparent, conducive, and secured work environment and invest in the learning and development of its team members so that they can develop their competencies while creating a talent pool for the Company. The well-experienced members of ourEHS segment are constantly and tirelessly working towards making our organisation Accident-free. Some of the health and safety protocols and procedures that are inculcated in the system:
• Regular safety training sessions to each employee to equip them with knowledge and information regarding safety standards and procedures.
• Conducting regular safety audits to identify potential workplace risks and hazards and chalking out preventive measures.
• Employees working at shop floor are provided with personal protective equipment (PPE) to shield themselves from potential dangers like falls, cuts, burns etc.
• Jindal SAW believes in always being ready and equipped to respond to emergencies like fires, natural catastrophes, and medical problems by developing well-structured plans and protocols.
• Jindal SAW deploys environmentally friendly practices to minimise pollution and lessen its adverse effects on the environment.
• The Company ensures that it adheres to all the safety rules and guidelines as prescribed by the various government authorities.
11. Internal Control Systems and their Advocacy
The Company has implemented a comprehensive mechanism across all business verticals and systems to maintain internal controls, ensuring efficiency and reliability in its operations. To achieve effective internal controls, the Company has established a robust framework consisting of various Standard Operating Procedures, standardisation of processes in SAP, and regular updates of processes and controls through SAP. Additionally, the Company employs continuous monitoring systems, maker-checker concepts, and implements Delegation of Authority matrices to enhance internal controls.
Key measures in place include robust data security management, the use of data analytics in internal audits, and the execution of operations through SOPs to ensure compliance. The Company utilises state-of-the-art technology to enhance operational efficiency and employs a robust risk management system to identify and mitigate risks associated with business activities. Moreover, maintaining books of accounts in SAP and executing transactions through SAP setups ensures precision, accuracy, and integrity in reporting.
The Company extensively uses SAP to standardise internal control processes across various functions, including finance, human resources, production, and logistics. Integration of DOA matrices into SAP setups allows for transaction approval and is periodically reviewed by management and auditors. Furthermore, the Company follows a zero-tolerance policy towards statutory non- compliance and has a solid online legal compliance management system in place.
The Company conducts internal audits annually based on an approved audit plan established on risk assessment. Internal audits are conducted by both internal and external auditors, including premier global auditing firm Deloitte Haskins & Sells LLP, which identifies areas for improvement and corrective action. A strong code of ethics is in place to ensure compliance with the guidelines mandated by the Securities and Exchange Board of India, with a Whistle Blower Policy for reporting violations.
The Company also implements electronic legal compliance monitoring software to cover all applicable laws and monitors compliance due dates. Auditing processes are conducted by Deloitte Haskins & Sells, LLP, utilising best practices and techniques aligned with global standards. The Internal Audit Report is presented to the Audit Committee quarterly, discussing major findings and compliance steps taken.
Additionally, the Company regularly assesses processes and efficiency to ensure alignment with evolving business needs, with process improvements carried out as required. Risk management policies are followed to assess and mitigate risks, with technology utilised to standardise risk mitigation plans. Finally, the Company assigns responsibilities and accountabilities to ensure compliance with company policies and procedures, ensuring smooth operations and adherence to best practices.
12. Companys Performance and Business Outlook
Financial performance with respect to operational performance
Figures in /Lakhs
| Particulars | 2021-22 | % | 2022-23 | % | 2023-24 | % |
| Gross Revenue from operations | 11,02,227.48 | 15,28,254.11 | 17,96,196.84 | |||
| Profit before finance cost, depreciation, exceptional items and tax | 1,38,512.85 | 13% | 1,82,693.20 | 12% | 3,22,611.21 | 18% |
| Profit before tax | 63,711.22 | 6% | 93,796.49 | 6% | 2,18,828.37 | 12% |
| Profit after tax | 40,549.85 | 4% | 71,483.56 | 5% | 1,61,410.65 | 9% |
| Cash Profit | 77,726.37 | 1,06,950.32 | 2,06,612.68 | |||
| Net Fixed assets (Excluding Intangible Assets) | 6,01,053.90 | 6,09,621.21 | 7,81,225.28 | |||
| Net Worth Excluding Revaluation | 7,48,905.65 | 8,10,013.13 | 10,19,132.87 |
1. Profit before finance cost, depreciation and exceptional items has gone up to 3,22,611.21 Lakhs from 1,82,693.20 Lakhs mainly due to higher NSR and increase in efficiency in the operations during the year.
2. Finance cost has increased to 58,580.81 Lakhs from 53,429.95 Lakhs during the year because of increase in interest rates and increase in working capital requirement in terms of increase in Volume.
3. Depreciation and Amortisation charge increased to 45,202.03 Lakhs from 35,466.76 Lakhs on account of capitalisation.
4. Profit before tax increased to 2,18,828.37 from 93,796.49 mainly due increase in EBIDTA during the year.
5. Profit after tax during FY 2023-24 increased to 1,61,410.65 Lakhs from 71,483.56 Lakhs in FY 2022-23.
6. Cash Profit (PAT + Depreciation and Amortisation) increased to 2,06,612.68 Lakhs during the FY 2023-24 year from 1,06,950.32 Lakhs in FY 2022-23.
Geographical Distribution of Gross Revenue from Operations
Figures in /Lakhs
| Particulars | 2021-22 | 2022-23 | 2023-24 | |||
| Domestic Turnover | 9,02,588.09 | 82% | 11,94,662.36 | 78% | 13,69,284.99 | 76% |
| Export Turnover | 1,99,639.39 | 18% | 3,33,591.75 | 22% | 4,26,911.85 | 24% |
| Total | 11,02,227.48 | 15,28,254.11 | 17,96,196.84 | |||
Net worth Figures in/Lakhs
| Particulars | As at March 31, 2022 | As at March 31, 2023 | As at March 31, 2024 |
| Equity Share Capital | 6,395.19 | 6,395.19 | 6,395.19 |
| Other Equity | 7,42,510.46 | 8,03,617.94 | 10,12,737.68 |
| Total | 7,48,905.65 | 8,10,013.13 | 10,19,132.87 |
Total Debt
| Particulars | As on March 31, 2022 | As on March 31, 2023 | As on March 31, 2024 |
| Non Current Debt (including Current Maturities) | 1,38,331.40 | 1,20,276.14 | 1,79,665.89 |
| Current Debt | 2,78,926.96 | 2,08,719.56 | 2,09,025.81 |
| Total | 4,17,258.36 | 3,28,995.70 | 3,88,691.70 |
Total Debt of the Company has increased from 3,28,995.70 lakhs as on March 31, 2023 to 3,88,691.70 as on March 31, 2024, mainly on account of increase in Term loan of 1,00,000 lakhs for the acquisition of Sathavahana Ispat Limited under IBC route vide NCLT order dated 31st March 2023. The Company has closing cash and cash equivalents and bank balance of 59,764.61 lakhs. Considering the cash, the adjusted net debt is calculated to be 3,28,927.09 lakhs as on March 31, 2024, as compared to 3,22,647.55 lakhs on March 31, 2023.
Product Performance and Analysis
| Particulars | FY 2021-22 | FY 2022-23 | FY 2023-24 |
| A) Iron and Steel Pipes | |||
| Production | 10,25,987 | 12,55,877 | 16,86,441 |
| Sales | 10,23,567 | 11,39,995 | 15,61,647 |
| Job Work | 23,231 | 1,15,220 | 86,259 |
| B) Pellets | |||
| Production | 14,99,949 | 14,99,939 | 15,37,444 |
| Sales | 15,17,410 | 14,57,106 | 15,79,537 |
Iron and Steel Pipes:
During the Financial Year 2023-24, the volumes of iron and steel pipes have increased by approximately 31 percent, as compared to FY 2022-23.
Pellets:
During the Financial Year 2023-24, sales volumes of pellets have increased by approximately 8 percent, as compared to FY 2022-23.
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