HomeUncategorizedKalyani Steel Battles Hurdles Amid Rising Input Costs and Cheap Imports

Kalyani Steel Battles Hurdles Amid Rising Input Costs and Cheap Imports

Kalyani Steel, a leading iron and steel forging company based in Pune, is facing significant challenges as it grapples with rising input costs and the influx of cheap steel imports. According to Managing Director RK Goyal, the company’s revenues are expected to remain flat in 2025, with no substantial increase in earnings before interest, taxes, depreciation, and amortisation (EBITDA). This outlook reflects the ongoing strain from external pressures on margins and revenue growth.

The company attributes its financial challenges to rising iron ore prices, which have surged by ₹1,000 per tonne, reaching ₹1,700-₹1,800 per tonne. Additionally, the depreciation of the rupee has increased the cost of key imports, such as ferroalloys and refractories, resulting in an overall cost increase of approximately ₹3,000 per metric tonne. Moreover, the proposed rise in iron ore duties by the Karnataka government is expected to exacerbate these cost pressures. Goyal further pointed out that the influx of cheap steel imports, particularly from China and countries with Free Trade Agreements (FTAs), is negatively affecting margins and volumes, despite the steady demand from the passenger car and two-wheeler industries.

Kalyani Steel is pinning some hope on the proposed safeguard duties on steel imports, which are currently under investigation. These duties primarily target flat products like hot-rolled coils and sheets, but Goyal has urged that the scope of the investigation should be expanded to include specialty steel and long products. He believes that such measures could provide much-needed relief to the sector. While there is optimism surrounding government initiatives, such as the infrastructure push and increased corporate capital expenditure (capex) spending, Kalyani Steel’s growth prospects for now remain limited. “We are already operating at 100% capacity, so there won’t be significant growth in revenue. Our EBITDA margins will largely depend on market sentiment and the implementation of safeguard duties,” Goyal stated.

Despite these challenges, Kalyani Steel’s market capitalisation has seen impressive growth, rising by 151% over the past year. However, the company remains cautious, recognising the need to navigate an increasingly complex market environment marked by rising costs and import competition. As the steel sector continues to face both domestic and global pressures, Kalyani Steel’s future performance will depend on its ability to adapt to the changing landscape and secure more favourable trade policies. The company’s strategy to address these challenges, including seeking price hikes and government support, will be crucial to maintaining its market position in the coming years.

 

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