The Stock Markets Were Up 3,000 Points Last Week
Foreign institutional investors are back on Dalal Street
On Episode 538 of The Core Report, financial journalist Govindraj Ethiraj talks to Nilesh Shah, Managing Director at Kotak Mahindra Asset Management Company as well as Shankhadeep Mukherjee, Principal Analyst at CRU.
SHOW NOTES
(00:00) The Take
(05:38) The stock markets were up 3,000 points last week, on a strong holding pattern
(07:33) Rupee is strong, forex reserves hit 3 month high
(08:07) Iraq, 2nd largest OPEC oil producer, to hike output too
(09:51) India’s bottom of the pyramid needs more institutionalised investment options, Kotak Mutual Fund
(27:49) India wants to impose a 12% duty on steel imports, where could that go?
NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on [email protected].
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Good morning, it's Monday, the 24th of March and this is Govindraj Ethiraj Headquarters in broadcasting and streaming from a warm Mumbai, India's financial capital.
The Take: Trump talks tough on trade, but the McDonald's example says otherwise
US President Donald Trump's favourite McDonald's order is believed to be two Big Macs, two Fillet-O-Fish sandwiches and a large chocolate shake malted.
On some days, he even starts his day with McDonald's and there are reports dating back several years documenting his fondness for burgers at all times of the day. There are many photographs as well, most recently after he won the 2024 US elections of him wolfing down a McDonald's meal with friends and aides aboard his private jet. Arguably, as President of the United States, he's done more for the McDonald's brand consistently than perhaps even for Tesla, despite the unusually grand White House endorsement he gave the electric car and Elon Musk.
Now, in case you missed it, McDonald's announced last week its formal entry into India's Global Capability Centre space, its largest such investment outside the US. GCCs are captive arms of multinational companies handling increasingly complex operations across the value chain, from drug research and development to chip design and core business processes. McDonald's was not a silent entry by any stretch.
McDonald's chairman and CEO Christopher Kempinski, a former Procter & Gamble and Kraft Foods veteran, arrived in Hyderabad and met with Chief Minister Anumola Revanthreddy. According to reports, he even explained why McDonald's chose Hyderabad over other cities. Kempinski was accompanied by top brass and said they were exploring ways to step up sourcing from Indian farmers for both domestic and international markets.
McDonald's announced that it would occupy a large facility in Hyderabad and employ close to 2,000 people and develop it into a skilling hub. McDonald's, by the way, has a longstanding presence in India, close to 30 years old and about 600 stores across India. Now, McDonald's setting up of that GCC, which obviously feeds global operations in India, is worth viewing in the context of the upcoming tariff war expected to start on the 2nd of April.
It does appear that while negotiations are ongoing and officials on both sides continue them, there seems to be a mild thaw in the tension, at least as far as India goes. Trump separately has said he will be flexible last week, though he did not define that. India is expected to concede on select tariff lines, including whisky, superbikes, and maybe California almonds.
Now, the interesting thing is that despite President Trump's repeated threats, India may be closer to a trade compromise with the United States than many other countries, largely because it's already started reducing tariffs and sectors of interest to the United States and has not so far demonstrated a confrontationist approach. But to go back to McDonald's, they're not alone. In February, Google announced the opening of one of the largest offices in Bangalore called Anantha, spread across 1.6 million square feet and meant to house about 5,000 employees. While work on that facility would have obviously begun a while ago, that's exactly the point, as we've been arguing on the core report. Corporate America's fortunes are deeply intertwined with Indian talent, and increasingly that talent sits right here in India. There are now over 1,700 global capability centres, like the one McDonald's is bringing in and setting up, employing more than 1.5 million people, mostly in high-skilled roles. An estimated 70% of those employees work for American companies. And then there is the work that Indian IT majors, including the Wipro, Infosys, and TCS do. Indian IT exports stood around $200 billion last year, of which 60% was to the US.
So you can see the interlocking there too. Last week, Cisco CEO Chuck Robbins told CNBC that the Trump administration wants American companies to win. He said that they want to protect the lead that American companies have and win the artificial intelligence race.
So, if Trump wants American companies to win, then it is worth pondering, once again, what explains their winning so far? And what lines might they cross, or which lines will they not cross? For context, Cisco, the $54 billion tech giant, started operations in India in 1995, employs around 15,000 people, and runs one of its largest development centres outside the United States here.
Yes, you got it right. Both McDonald's and Cisco came to India at roughly the same time. Just last year, Cisco also opened its first manufacturing facility in Chennai, focused on routers, with an announced goal of creating 1,200 jobs.
Trump loves American brands, some more than others. In the case of McDonald's, and Harley-Davidson, the all-American motorcycle brand that resonates with his water base and the Made in America ethos, the affection is somewhat clear and visible. Maybe the tariff impact on Indian exports to the US will be harsh in some cases, but that's only if India does not reduce its own tariffs correspondingly.
The core believes that this is the right moment for India to cut some of its tariffs and make both the country and its industries more globally competitive, almost like the liberalisation push of the 90s, though in much smaller measure. Indian industry can rise to the challenge if nudged in the right direction. If Trump's motto is Make America Great Again, then India's motto for now should be Make India Competitive Again.
And that brings us to the top stories and themes.
The stock markets were up about 3,000 points last week and continue on a strong holding pattern.
India's bottom of the pyramid needs more institutionalised investment options, says Kodak Mutual Fund.
The rupee is strong and the reserves hit a three-month high.
India wants to impose a 12% duty on steel imports. Where could that go?
Iraq, the second-largest organisation of petroleum-exporting countries, or OPEC oil producer, is to hike output too, suggesting a softening oil outlook ahead.
The Markets Are On A Strong Holding Pattern
Foreign institutional investors are back on the large street, as we've been somewhat carefully pointing out in the last few days. Data has now come in that says there were buyers on Tuesday and Thursday buying a little over 4,500 crores worth of stock. Now, the numbers may not be large, but if there is even a slight reversal in sentiment, which it does look like, if you were to add up everything else, then it seems to be a good sign for now.
Remember, the markets are also rising despite the Trump tariff uncertainty, which suggests the markets are already discounting it or don't care. It's more likely to be the former, by the way, for reasons we've already touched upon. Also, service exports are unlikely to be touched by the tariff at least as things stand.
And that is where India, thanks to its IT industry and GCC, is well-positioned, at least in the medium to long term. Analysts told Business Standard newspaper that there is a sharp decline in FII short positions and increase in long positions in the futures market. Remember, the market started falling in September 2024, when foreign institutional investors started dumping stock.
We will, of course, break down those FII numbers and where they're coming from in some detail, but that's later in the week. Last week, the Nifty 50 rose about 4.3% or 953 points to 23,350, while the 30-stock Sensex rose a little over 4% or over 3,000 points to 76,905. This apparently, according to Bloomberg data, was the biggest weekly rally for the key indices since February 2021, or four years.
Meanwhile, the index for mid-cap and small caps were also up quite sharply, both between 7% and 8%. And then it was a strong Friday with stocks rising for the fifth day, with the Nifty and Sensex up 0.7% approximately each. Now, while there is no single number that jumps out, a combination of factors, including a possible interest rate cut on top of easing inflation, is giving analysts a sense that things are turning around, including for companies and businesses and upcoming quarterly results.
The Rupee Is Sailing
The rupee ended at Rs. 85.97 on Friday after hitting a 10-week high of Rs. 85.93 on Friday's session, having gained about 1.2% in the week. Meanwhile, India's foreign exchange reserves have risen by more than $300 million to more than a three-month high of $654 billion as of March 14, according to data released on Friday last week. They had risen by about $15 billion in the prior week, the biggest jump since August 2021, according to figures put together by Reuters.
Oil
We are almost surely headed into a soft oil price scenario as things stand, which will benefit countries like India, with more production increases being announced apart from the United States' own promise that they would drill baby drill. The latest is Iraq, which has said it will raise oil production capacity to more than 6 million barrels per day by 2029, Reuters quoted Iraq's oil ministry as saying on Sunday. Iraq is the second-largest producer within the Organisation of Petroleum Exporting Countries Plus group that includes OPEC and allies like Russia, and it also last month reaffirmed a commitment to the group's output agreement.
Iraq said that they will hike output through oil exploration and nationwide drilling activity, including with oil major BP, to redevelop four Kirkuk oil and gas fields. Iran's current oil output stands at about 4 million barrels per day, according to government officials there. OPEC had been cutting output by about 5.8 million barrels per day, or about 5.7% or close to 6% of global supply in a series of steps agreed since 2022 but is now beginning or rather is set to begin scheduled supply increases in April. Brent crude meanwhile has inched up a little and is now quoting around $72 a barrel. India to remove duty on onion exports. In a sign that there is clear or enough supply in the domestic market, India will remove a 20% duty on onion exports starting April 1, the government said over the weekend.
This move follows nearly five months of export restrictions, including minimum export prices and bans imposed to ensure domestic availability, according to Reuters. The duty was in effect from September 2024.
Targeting The Bottom Of The Pyramid Investor
Targeting the saver as opposed to the investor has been a stated objective of many financial services companies in India, particularly in longer-term investments like mutual funds. The other side is that the bottom of India's economic pyramid is more exposed and prone to falling prey to Ponzi schemes and usurious interest rate traps and the like. So could reducing the ticket size of mutual funds be one way to attract such investors, among others, to a more institutionalised market?
The 27-year-old Kotak Mahindra Mutual Fund has announced the launch of a Choti SIP facility, literally translating small systematic investment plans for regular investments into mutual funds. I reached out to Nilesh Shah, Managing Director of Kotak Mutual Fund, who says that there are only 54 million unique investors in mutual funds and thus the opportunity is large. In the Chota SIP, a new investor could begin their wealth creation journey, as he says, with a minimum amount of 250 rupees.
There are some other mechanics to the scheme, but I began by asking Shah, a veteran industry man, what was the rationale behind this small ticket scheme?
INTERVIEW TRANSCRIPT
Nilesh Shah: Govind Bhai, we have reached about 5.25 crore investors. To go from here to further, we obviously have to go and service semi-urban and rural India. And from rich and upper middle class, we have to go towards lower middle class and bottom of the pyramid.
So one is the business consideration. Second, while equity mutual funds are risky, they also deliver returns and provide financial security if implemented the right way. The bottom of the pyramid keeps on losing money in Ponzi schemes, in the lottery, in F&O trading, and so many other ways to lose money.
These are the people who need financial security. I think we need lower amounts so that they can walk into mutual funds, get experience, and then increase more allocation. And second, they can all become part of India's growth story.
Govindraj Ethiraj: From a mutual fund or an asset management company, how does the cost of servicing such small accounts pan out? For example, a bank today would charge you if you maintain or you're not able to go above a certain amount in terms of minimum balance.
Nilesh Shah: Over here, we are using technology to ensure that our transaction cost is bare minimum. So KYC is done on a concessional basis thanks to SEBI's intervention. The payment is through UPI, which is free.
If it was through the ECS mandate, the cost would have become prohibitive. Third, we obviously can't reach everyone on a virtual basis. We need food on the street as well.
And they will find it very, very difficult to be remunerated with 250 rupees SIP. So NC has come with an incentive scheme so that they can take additional incentive for popularising the scheme. The whole objective is to lower transaction costs as much as possible, leverage technology to create distribution reach, and incentivise the intermediaries so that they can reach out to the maximum number of people.
Govindraj Ethiraj: And how would that work out when you start incentivising intermediaries? Would there be enough left or is that more like a marketing cost?
Nilesh Shah: So one, this is coming from the IAP fund and you have to start an SIP for 250 rupees or more for a five year period. And once it is active for two years, you will get 500 rupees as an incentive for new industry customers. So we don't want existing 5 crore investors to start 250 rupees SIP.
You already know what a mutual fund is. We want to bring new to industry customers and which is why this incentive is designed for new to industry customers, payable only after two years of active SIP and payable for a longer term SIP.
Govindraj Ethiraj: So you talked about 54 million unique investors in mutual funds. Going by everything else in terms of, let's say, the potential sample size or size of potential investors in mutual funds, what would you think is the target that the industry or funds like you could aim for in terms of bringing in new investors and including into this, the chota kind of SIP route?
Nilesh Shah: So Govind Bhai, we are also venturing into this space for the first time in true format. All along, you know, we have only dipped our hands and feet in water. Now we are jumping in the middle of the storm.
So I really don't know what the numbers will be, but we'll keep on learning from this experiment and hope that we will have more customers over a period of time than what we have today in choti SIP. This is one instrument which can provide financial security to people, provided it is rightly sold and it is rightly serviced.
Govindraj Ethiraj: So the bet I'm assuming then is that while there is a minimum amount of 250, what you're actually hoping is that people come in at higher levels or progressively go to higher amounts.
Nilesh Shah: Absolutely. Come here, see the experience and then increase the amount as per your comfort.
Govindraj Ethiraj: Got it. And I want to come back to mechanics. If we can talk a little bit about how the markets are right now.
Of course, you could invest at any point in a mutual fund and that's a good time. But if you were to be talking to people who want to come in at this point or you would like them to come in at this point with this kind of size of investments, what would you tell them?
Nilesh Shah: So one, Govind, we are ensuring that only limited products are available for choti SIP. We have 150 schemes, but not all of them are available for choti SIP. There is one for conservative investor equity savings schemes, one for the average investor, a balanced advantage fund, one for an aggressive investor, an asset allocation fund, and one for the general investor, a large cap equity fund.
Other than these four schemes, we are not launching choti SIP in other thematic sectoral and small cap, mid cap schemes. Second, our focus is on doing the right communication. So we are leveraging technology for multilingual communication so that we can speak to people in the language which they can understand.
The third focus is on working with partners to ensure that they do the right selling and they can do the right servicing, especially if there is general volatility in the market. Having said that, by building those guardrails, we hope that investors will be long term. And our communication is very simple.
You are participating in India's growth story, but there will be ups and downs in this journey. Think about volatility first before you invest. Be aware that SIPs could give negative returns in a scenario like today.
Invest with moderate return expectation. Don't expect last five years performance going forward in a conservative hybrid fund. Those returns are of pure equity funds, not conservative hybrid funds.
So the whole effort is to ensure that we bring customers with the right messaging. We service them throughout this journey in a manner that they can remain longer term investors. And over a period of time, as their confidence grows, as their comfort grows, they will be able to allocate more money into equity mutual funds.
Govindraj Ethiraj: That's a useful point to pick on. So you said, don't look at what happened in the last five years. And what are some of the lessons that we have learned from the last five years, particularly in the context of mutual funds and SIPs?
Because obviously markets have corrected by maybe 14-15% from peak. But we've also seen a lot of uncertainty or people having second thoughts about SIP investments, because they obviously came in almost like a flood in the last two, three years. So what are the lessons that we can take away from this particular period?
Nilesh Shah: So one thing that is quite visible is that people who have come through assisted journeys via advisor or distributor, their longevity is much, much higher compared to people who have come on a non-assisted basis, probably looking at just the last six months, or the last one year's performance. So we have to be very clear that the non-assisted segment requires far more support in terms of communication compared to the assisted segment. Number two, what we have also seen is that people who have experienced volatility in the past, their behaviour is far more stable.
People who have started in recent times post-COVID era, their behaviour is more unstable. We need to put more effort in communicating with people who have come after COVID in terms of engagement, in terms of increasing their longevity. We take advantage of technology to find out the likely redemption profile of our customers, our investors, and then share it with our partners for their communication.
We also communicate with our investors directly to give them support so that they don't end up making the wrong decision at the wrong time. Thanks to the word of mouth publicity of our satisfied SIP investors, thanks to the work of partners, the mutual funds IEA campaign kind of work by MFI and our communication with our investors, we have been able to ensure that SIP inflows remains fairly strong and the stoppages are reasonably under control.
Govindraj Ethiraj: Right. Nilesh, what are your own takeaways from the market correction that we've seen? I mean, you've seen several corrections and of course bounce backs and very strong ones at that.
But if you were to look at the correction of the last, let's say, September 2024 to maybe a few days ago, and maybe we are reviving now, what are your personal takeaways?
Nilesh Shah: So one Govind long back in technology media telecom crash, someone had given a comment and I thought that was a Guru Mantra. Nilesh Bhai, don't do all those mistakes that I can do. Then I don't need you.
As a professional fund manager, don't make mistakes which I as a retail investor can do. And that remained with me forever. I think in every correction, that conviction that we have to bet on real businesses and not on make-believe businesses.
We have to pay the price of earning but not the price of vision. That's so important. And when there was momentum, our funds were underperforming.
At one point of time, our small and mid-cap funds were underperforming the benchmark index by 10 percentage points. In that kind of scenario to give confidence to our fund managers that they don't worry, these kinds of things have happened in the past. And the ultimate winner is the person who has betted on the right stocks, who has invested in the right stocks.
Hand-holding that process, that discipline throughout this journey is the most important factor. It gives so much confidence. During correction, our funds have started outperforming benchmark indices by a margin.
Now many times investors come and say, 6 months ago Nilesh Bhai, we thought what is your need? But now we understand what is your need? Why do you need it?
Govindraj Ethiraj: If I were to drill down a little bit, when you say price to earnings versus price to vision, I mean, you're also saying that there are stocks which are fancied by maybe investors, other fund managers, which are not necessarily fundamentally strong. And you too have been tempted but as I can sense, you've resisted the temptation.
Nilesh Shah: Absolutely. In fact, you know, there are so many low floating stocks where you could ramp up valuation with your own purchase and controlling the floating stock. Your performance will look very, very superior, but that will never be encashable.
The day redemption comes and you come to sell those stocks, you will find real value. Now, it's always tempting for fund managers to be superior on performance, ignoring the risk. We as the CEO or as the CIO have to provide them that comfort and confidence that let's focus on our long-term performance.
Let's not take these shortcuts. Let's not go for short-term performance. This combination of discipline, investment process and risk management should differentiate us vis-a-vis our peers.
And I'm so glad we did an analysis of the top 50 falls in the Nifty 500 sometime back. And very few of them appeared in any mutual funds portfolio, not just Kotak Mutual Fund, but any mutual fund portfolio. By and large, the mutual fund industry avoided the duds.
Govindraj Ethiraj: If you were to come back to Kotak for a moment and sum up your investment strategy, which incorporates what you've been just telling me as to what to avoid and what to go for, could you walk us through that?
Nilesh Shah: So, first is business. I want to invest in real businesses. Second is management.
We want to bet on management who has vision, but who will execute and who will take care of minority shareholders. Governance is far more critical than capability. And finally, it's the valuation.
Price is what you pay, value is what you get. We are neither value investors nor growth investors. We are growing at reasonable prices for investors.
I don't want to overpay. And I also believe that the market is not so kind that I will always get an opportunity of underpaying. I'd rather pay fair value and stay with management, which will continue to grow the business.
Business management valuation, this is what fund managers look at. But as the investment committee, we also have to look at liquidity and risk management. We also have to look at whether our execution happens in the best interest of our investors.
And there's no front running, there's no insider trading. So, a whole other aspect of investment management is applied at the firm level through risk management policy, so that our governance continues to remain good, and our execution remains good. And we are giving, we are showing a return which we are capable of delivering in a real sense.
The liquidity of a portfolio is equally important.
Govindraj Ethiraj: I'm going to come to the outlook for the market in general in a moment. But you talked about governance and protecting small investors. Is that something that you feel is as alive an issue as it was, let's say, 10 years ago or even longer?
Nilesh Shah: Undoubtedly, yes. It's not that we have to be as vigilant as 10 years back. But nevertheless, you have to be vigilant.
We are like goalkeepers, we have to be ready for any ball which comes to us. And we always should remember that no matter how many goals you save, you will always be remembered for the goals which you allow to be scored. So your objective as a fund manager is to ensure that all the balls thrown at you, you are able to block.
Now, today, the pitch is more in the midfield than in your field. But you still have to be careful. You never know one long kick can come from far and hit the goalpost.
We are thankful to SEBI and the Ministry of Finance for empowering us. For related party transactions, approval of the majority of minority shareholders is the perfect step. It gives us an opportunity to make our viewpoint with management.
And, you know, there are so many cases in which the mutual fund industry has come together to ensure that there is better governance.
Govindraj Ethiraj: Right. And that's a subject that I'd love to engage with you deeper in general, which is governance. Let me come to Outlook, Nilesh.
So where we are today and where we are headed in the next two or three quarters, how are things looking in the context of a broader economy? Because you are positioning this as a bet on the India growth story. And how are things looking on a slightly more specific level, which is earnings for the next few quarters?
Nilesh Shah: So we will be looking at a growth rate, which is between six and a half to seven percent better than September and December 24 growth. Earnings will be between 250 to 275 rupees per quarter for Nifty 50 stocks. And slowly, slowly it should go towards 270 to 280 kinds of range.
Earnings growth on a lower base of F525 will be in the low double digit in F526. Of course, there will be stocks and sectors which will deliver higher earnings growth and some which will deliver lower earnings growth. Monsoon should be normal around averages based on the current indication, which is again supportive for our economy.
Oil prices should remain soft thanks to President Trump's policy of drill, baby, drill. So overall, we are looking at six and a half to seven percent GDP growth for next one year. And earnings growth is somewhere around low double digit on the lower base of F525.
Govindraj Ethiraj: Got it. Nilesh, thank you so much for joining me.
India Wants To Raise Duties On Steel
The Director General of Trade Remedies under the Ministry of Commerce and Industry has recommended a 12 percent safeguard duty on certain steel products for 200 days to protect domestic steel industry from what it describes as serious injury caused by recent surge in such imports. The recommendation comes amidst concerns of further increases in steel imports following the 25 percent tariff on steel and aluminium imposed by the United States on March 12th. So steel and aluminium exports to the United States from presumably countries like China and Vietnam are possibly turning around to countries like India.
A safeguard duty is a temporary tariff imposed to shield the domestic industry from a sudden surge in imports. Now, the industry, of course, has been campaigning for long for duty increases even before that tariff increase by the United States kicked into force. And it's also pointed out that factories in China, for example, are producing at cost or only to keep their plants running and thus effectively dumping their steel in India.
I reached out to Shankhadeep Mukherjee, senior analyst and India long products analyst and team leader at global metals mining and fertiliser data tracking firm CRU, and I began by asking him how he was seeing the impact of this potential duty hype.
INTERVIEW TRANSCRIPT
Shankhadeep Mukherjee: Now, the key thing to keep in mind over here is that India has a lot of non-tariff barriers, which is the BIS standard that is there. So if you have to import a material into the Indian market, you need to have BIS certification with you. And where there are some provisions that in case of a critical requirement of a product which is not available domestically, then NOC could have been obtained and those materials could have been imported even if they lacked the certification.
Now, what happened last year, specifically in Q3 of 2024, is that a lot of this provision of NOC was getting misused and we saw a significant spike of imports of sheet material during that time. Subsequently, those NOC issues or those compliance burdens have increased and scrutiny has increased as well. But the provision was there and there were some excess imports.
Govindraj Ethiraj: So when people import hot-rolled coils, do they use them as hot-rolled coils or is it for further conversion to cold-rolled or downstream?
Shankhadeep Mukherjee: I want to make sure of it. There will be some specific grades they will be buying. So for example, we don't produce domestically yet transformer grade products.
So that's just an example I'm giving. So we import that from outside. So the non-grain orientated or grain orientated products basically.
So some of those are imported. So they are used for the processing. Some of them are used as is but some of them would be used downstream as well.
Govindraj Ethiraj: Right. Now, we're going to put a 12% import duty on imported steel. Now, would that apply for all kinds of steel as you understand it and what could be the implications of this additional duty?
Shankhadeep Mukherjee: So as of now, I actually see everywhere people are saying we are going to put this in but it's just a recommendation as of now from the Director General of Trade Remedies that we are going to put a safeguard duty of 12% for a period of 200 days. Now, the key thing to keep in mind, this is not a final determination because we now are going to have a 30-day oral hearing period where the industry will give their comments and there will be a public hearing and then there will be a final determination. So that's one of the first things I would highlight.
In terms of the impact of this 12% safeguard duty, we are expecting that there will be a partial pass-through of this duty on the steel fat products in India because we have been talking about this potential duty for quite some time. So some of this has already been priced in. If it does get implemented from April onwards after the oral hearing and the government then notifies that saying, okay fine, we'll go ahead with it, then we are expecting around 9-10% increase in prices next quarter.
There are some potentials which can dilute this pass-through though. For example, you might know that since early last year, 2024, we have commissioned a lot of hot-rolled coil, hot-rolled flat steel facilities in India and because of the weak market conditions, they were ramping up quite slowly. Some support these duties if implemented, those new capacities will get some support from the pricing front and they can ramp up a bit more strongly but the facility is tracking around 14-15 million tonnes of additional capacity which is quite a lot.
Govindraj Ethiraj: You said that we are adding about 14-15 million additional tonnes. So would that take the total figure from 65 to about 80? That's the first question.
Secondly, how are you seeing overall trends including in price in the context of where economic growth and current overall consumption is in India?
Shankhadeep Mukherjee: We will be seeing some growth in demand. So the number of 65 that I gave you, that was the demand number, not the production number. So we will be seeing some growth specifically after the Indian government's budget announcement of 2025.
We are likely to see a little bit more growth on the flat steel side because of the focus on services and manufacturing more than infrastructure spending. So we will see growth on that front. In terms of production, this is capacity which is coming up but in terms of production, we are not likely, we don't expect that all of these productions will immediately be successful.
So it will depend a lot more on how much exports we are able to do. So if I look at our current estimates, we are expecting India to go back to being again a net exporter of flat steel products from 2025. The appetite of demand growth in the rest of the world, especially in a tariff world where a lot of tariff investigations are happening everywhere else, the appetite for Indian material is going to be critical in determining how fast the production will grow.
We are expecting around 70-ish levels by the end of 2025 as far as production is concerned in the domestic market.
Govindraj Ethiraj: Right. Shankhadeep, thank you so much for joining me.
