Alloy 20 pipe fittings manufacturer companies weighed down by come down the price of Alloy 20 pipe, debt may struggle to meet their March-end debt obligations as they wait for the full impact of supportive policy measures to kick in. Nine of the top 20 indebted steel firms already have a default on one or more of their debt instruments. The total debt of these nine firms is Rs.1.59 trillion, or 41% of the total debt of the top 20 indebted steel manufacturers. Indian manufacturers companies of the alloy 20 forge fittings have been struggling in the face of rising imports of cheap steel products and slowing global demand, having expanded aggressively in recent years. Their debt servicing obligations overlapped with the downturn in demand.
The March quarter will see some improvement in terms of profitability but not great. However, overall profitability for the current fiscal will not be good; an analyst at India Ratings and Research Pvt. Ltd. Thomas does not expect the improvement in the March quarter to help steel makers meet debt obligations in a meaningful way. The government has put in place some supportive policy measures to provide them a cushion, but their impact will start showing up only in the first quarter of the fiscal starting in April. The steel and finance ministries are also working on a package for the steel sector that will be finalized in the next two months.
In September, in a bid to arrest the rising imports of cheap steel, the government implemented a safeguard duty of 20% for 200 days. In February, India also imposed a minimum import price (MIP) on a wide category of steel products. According to analysts and traders, the larger steel firms would be the beneficiaries of the MIP on foreign steel. it will have little impact of the smaller steel companies. It is only the top four steel companies who seem to have benefited from the MIP imposed. We do not see the smaller steel mills who cut down capacity utilization increasing it due to the MIP. On the contrary, as domestic steel manufacturers increase prices, the number of buyers are dwindling. You will find fewer buyers if prices increase,” said a Mumbai-based steel trader who did not want to be identified.
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