Extensive SWOT Analysis of Jindal Stainless – The Largest Manufacturer Of Stainless Steel In India

Quick Stats on Jindal Stainless

Founder	Om Prakash Jindal
Year Founded	1979
Origin	Hisar, Haryana
No. of Employees	6150+
Company Type	Public
Market Cap	Rs10,591.36 Crore (2022)
Annual Revenue	Rs39,527 Crore (2021)
Net Income/ Profit	Rs4,267 Crore (2021)

 

Products By Jindal Stainless

• Stainless Steel Slabs
• Hot Rolled Coils
• Cold Rolled Coils
• Stainless steel Plates

Competitors of Jindal Stainless

• Tata Steel
• APL Apollo
• KIOCL
• Sail

Now that we know everything we need to know about Jindal Stainless, let’s start with the SWOT analysis of Jindal Stainless.

SWOT Analysis Of Jindal Stainless

SWOT analysis is like a formula for identifying Strengths, Weaknesses, Opportunities, and Threats (SWOT) that a market possesses for a company. The main objective of this analysis is to help us, as investors and the company, to make business decisions wisely.

By using this method, we analyze where the company is falling short, where it is excelling, and what needs to be worked upon.

To better understand the SWOT analysis of Jindal Stainless, refer to the infographic below:

 

So let us first start by looking at the strengths of Jindal Stainless from the SWOT analysis of Jindal Stainless

Strengths of Jindal Stainless

The strengths of a firm can be positive qualities that help the company to maintain goodwill in the market or give it a competitive advantage. Mentioned below are some of Jindal Stainless’s strengths:

• Technologically Forward: Ever since its establishment, Jindal stainless has always followed the innovation pathway, they had adopted SAP BW/4HANA technology, making them one of the first companies to adopt this change in the technical field.
• Economics of Scale: Jindal Stainless is the fifth-largest steel producer in India. Thus it enjoys economies of scale. It holds the capacity of 1.1 million tonnes per annum of steel manufacturing.
• Strong Product Portfolio: Owning up to its name and brand value, Jindal Stainless caters to a variety of different audiences as it offers a large variety of products and services.
• Global Presence: Being one of the leading steel producers in the country, Jindal Stainless has been catering to an international audience, ever since expanded in countries like Germany, Indonesia, and Southeast Asia.
• Innovative: Jindal Stainless is known in the steel industry to manufacture products that are consumer-friendly and innovative. This innovation has always been the driving force for Jindal to be well connected with its customer base.
• Strong Market Presence: Because of its product quality and innovation, Jindal Stainless is at the forefront of the Steel Production market in India, This has given them an opportunity to charge a premium price compared to that of its competitors.
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Weaknesses of Jindal Stainless

Weaknesses are the areas where the company is lacking behind and needs improvement. Let’s have a look at the weaknesses of Jindal Stainless:

• High Cost of Technology: With the rising demand for steel, also comes the need of being constantly updated with technology. Businesses are adopting AI and machine learning to function on a day-to-day basis but they come at a hefty price.
• Lack of Loyalty: Since Jindal Stainless is known to have a knack for innovation, suppliers are in a constant state of fear of being replaced by technology.
• Declining Revenue: Due to the Covid 19 pandemic, the steel industry had hit a major dent as many construction activities were put at a halt resulting in huge losses.
• Limited Portfolio Diversification: The portfolio of Jindal Stainless is not as diversified as compared to other industry leaders like Tata steel, Reliance & BHEL, etc.
• Non Availability of Raw Materials: Having fewer mines under its control affects the availability of primal materials. Hence at times, there is the unavailability of the raw material which is required.
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Opportunities for Jindal Stainless

Opportunities are uncontrollable external events a person can potentially leverage. These are favourable external factors that could give an organisation a competitive advantage.

• Government Support: With new policies already supporting local businesses to prosper in the country and an increase in regulations in the industry has proven to become a huge benefit for this company.
• Technological Advancements: Adoption of technological advancements can help curb additional costs which can be used to manufacture a new product line.
• Changing Preferences: With government policies supporting many startups, many businesses are in constant need of raw materials. Companies need to keep an eye on these customers as they are in their experimental stage.
• Expected Rise in Domestic Steel Consumption: With a stable central government and a strong approach to programs like the “Make in India” movement, the domestic steel demand is expected to rise at a fast pace across all sectors. Jindal Stainless is favourably poised to take benefits in India’s next growth cycle with a wide variety of outputs, advanced technology, and flexibility.
• Growing Global Automotive Manufacturing Industry: The automotive industry which had gone into a downfall has been up again. Jindal Stainless tries to cater to various products for these industries in terms of both quality and quantity. This will also lead to an increase in revenues shortly.
• Strategic Acquisitions: Strategic acquisitions will help the company to achieve further economies of scale and enhance its product portfolio. The joint ventures between companies like rural companies in India have made Jindal Stainless the largest steel manufacturing company in India.
• Lower Interest Rate: With the inflation rate going down, Jindal stainless can provide credit to its customers with a lower interest rate and potentially increase its customer base.
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Threats to Jindal Stainless

Threats are the external factors that may cause loss to the firm over time or all at once. Some of these are stated below keeping Jindal Stainless in mind:

• Competition: Competition from existing and foreign players is a huge threat to Jindal Stainless. Some of the competitors are TATA Steel, Hindalco, Sail, etc.TATA steel is its biggest competitor and is the market leader. Due to this ongoing competition, there are price cuts which lead to a decrease in profit margin.
• Government & Environmental Regulations: The government has slightly different and more strict laws for the steel industry because it is our natural core and to maintain their control over the consumption of natural resources. While on the other hand organisations concerned about the environment also have their eyes on the steel industry due to its threat to natural resources and the environment.
• Changes in the Prices of Raw Materials & End Products: For steelmaking, it requires iron ore, metallurgical coal, limestone, etc. All these resources are scarce and procuring them is a difficult task. Sometimes it’s very difficult to mine in certain areas hence the prices of these materials keep on increasing and even the end products prices tend to change, this is a backdrop of Jindal Stainless.
• Product Diversification: Although Jindal Stainless is one of the leading steel producers, they can face tough competition from local as well as international companies for product diversification as companies have been expanding their product range.
• Unstable Environment: Due to the Covid 19 pandemic, steel demand plummeted, and ever since the industry has been coping with the after-effects of the same.
• Shortage of Human Resources: As the company is focusing on becoming more technologically forward, the company might face a lack of human resources in the near future.

This ends our extensive SWOT analysis of Jindal Stainless. Let us conclude our learning below.