India: Jindal Stainless posts INR 87 crore loss in Q1 on Covid impact

Jindal Stainless Limited (JSL) has recorded a loss of INR 87 crore in Q1 of FY21 compared to the profit of INR 67 crore posted in the corresponding period last year (CPLY), primarily on account of COVID-19 induced business environment.

The company's Q1 FY21 net revenue and EBITDA (Earnings before Interest, Taxes, Depreciation & Amortization) were severely hit, standing at INR 1,262 crore and INR 78 crore respectively. Sales volume contracted by 60 per cent, from 222,119 tonnes in CPLY to 88,814 tonnes in Q1 FY21.

The widespread disruption in supply chains and temporary suspension of manufacturing activity pulled down melt production to 90,329 tonnes, lower by 63 per cent over CPLY. Interest cost during the quarter fell by 8 per cent over CPLY to INR 131 crore. Even though April 2020 was a complete wash-out for domestic manufacturing, imports of stainless steel in April were even higher than the pre-COVID levels of January this year. While the overall imports jumped by 44 per cent during this period, those from Indonesia witnessed an eight-fold leap. The domestic industry awaited relief measures from the Government to alleviate these distorted trade practices.

Commenting on the company and sector performance in the first quarter of FY21, Managing Director, JSL, Abhyuday Jindal, said, "Domestic stainless steel industry was no exception to the slowdown caused by COVID-19. For JSL too, it was an unprecedented quarter, with operations completely suspended in April. Through agile business planning and a global outreach, we were able to revive our exports in the May-June period, which helped offset the adverse impact of a depressed domestic market to some extent. We have undertaken several business, operational, and strategic initiatives to minimize the impact of the pandemic, and hope to recover by the end of September'20 with improved business sentiments."

The share of exports in total sales in Q1 FY21 was 33 per cent, as against 20 per cent in CPLY.

With the gradual easing of nationwide lockdown in May-June, JSL's operations have been inching towards normalcy. An uptick in healthcare and two-wheeler segments along with likely improvement in the retail segment during festive season is expected to boost the demand for stainless steel in the coming months. This is over and above the conventional applications of stainless steel in construction, transportation, and process industries, which are slowly resuming pace.

In line with the government's vision to go Atmanirbhar, JSL is cutting down on imports of input materials by significantly enhancing their procurement from local sources. This is expected to mitigate price and inventory fluctuations, release working capital, and strengthen the domestic raw materials industry. A fully equipped and rail-linked Inland Container Depot, Jindal Stainless Logistics Park, has further helped JSL in expediting supply chain movement and curtailing costs.