We Are Expecting A Lot Of Good Orders In The Oil And Gas Sector From GAIL: Neeraj Kumar, Jindal Saw

We Are Expecting A Lot Of Good Orders In The Oil And Gas Sector From GAIL: Neeraj Kumar, Jindal Saw

ET Now: Tell us what is really the reason for this fall in pipes production in the quarter, what were your average realisations?

Neeraj Kumar: If you see Q4 last versus Q1 this year, that is not the correct benchmark that you should be looking at because typically if you see Q4 has always been the best quarter for Jindal Saw primarily because we have government contracts and therefore in Q1 there are issues with budgetary allocations etc and therefore the right benchmark to compare is the Q1 last year. And there if you see then the top line has actually marginally gone up but we have seen a drop at the PBT or at the EBITDA level that is primarily because of the rise in the raw material prices. The raw material prices as a percentage to turnover, if you see, has gone up 6% or so.

ET Now: Your margins have dipped, what was the reason for a dip in your margins and are the higher steel and coking coal or iron ore prices to be blamed for this?

Neeraj Kumar: I would not say blamed, but yes the spike in the raw material prices in the last quarter has resulted in this temporary fall but hopefully during this year we would be able to pass in all these increases to the customers and we will restore our margin. So this quarter because of the spike the margins did come down a little bit.

ET Now: And with many oil producers now cutting output do you foresee a cut in demand given that they are your key customers?

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Neeraj Kumar: If you look at this year, GAIL is slated for some very healthy tenders and therefore we are expecting a lot of good orders in the oil and gas sector from GAIL in India but internationally yes if you look at the Middle East and Europe they continue to struggle and therefore if you see the exports which typically used to be around 25% of our top line has come down to 11%. So we do expect a sluggish export based primarily on Middle East and Europe but more than that it will be made up by the domestic sector because we are expecting some good orders from GAIL.

ET Now: What is the targeted order book then and your revenues, what can we expect for the year?

Neeraj Kumar: We should be on track. As I told you our current order book is in excess of a million ton and we would be on track for FY18 wherein in the balance quarters we hope to catch up with the margins and the profits as well. Read more

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