India: JSL net profit up 10% to INR 153 cr in FY20

Jindal Stainless Ltd (JSL) has clocked 10 per cent growth in its net profit to INR 153 crore in FY20 as against INR 139 crore registered in FY19.

The revenue of the company in FY19-20 remained almost flat at INR 12,320 crore. Sales volume in FY19-20 stood at 915,900 tonnes, rising by 7 per cent over the corresponding period of last year. On a yearly basis, the company recorded the highest ever stainless steel production at 973,995 tonnes. During FY19-20, JSL obtained all requisite approvals from authorities and successfully exited the Corporate Debt Restructuring (CDR) framework.

Commenting on the FY19-20 performance, Managing Director, Jindal Stainless Limited (JSL), Abhyuday Jindal, said "JSL recorded steady operational performance in FY19-20. As GDP growth slowed down in the last quarter of the fiscal, we witnessed erosion in margins. Going forward, we are turning our focus on growing markets, such as the two-wheeler and healthcare industries. The domestic stainless steel industry, which has long required relief from imports from ASEAN and FTA countries, has both the capacity and the capability to cater to Indian demand. We are hopeful for affirmative government action under the Atmanirbhar package. Successful implementation of the Vocal for Local call by the government will go a long way in ensuring job generation and demand revival in the economy."

It's worth noting that stainless steel imports from Indonesia more than trebled from 75,187 MT in FY18-19 to 2,60,881 MT in FY19-20, severely impacting pricing in the Indian market, and exerting pressure on margins. To counter imports and diversify markets, the company grew its exports to 188,679 tonnes during FY19-20, up by 21 per cent over the comparable period of last year. To expand its presence in the domestic pipe and tube market and make genuine stainless steel products available to Indian consumers, the company launched a co-branding scheme Jindal Saathi in the last fiscal, and will carry it forward in the current fiscal.

JSL's Q4FY20 witnessed a decline in growth on all accounts, largely due to muted economic sentiments given the COVID-19 outbreak. A steadily falling Nickel price during Q4 over Q3 negatively impacted inventory valuation, which further affected profitability. Sales volume also saw a decline of 2 per cent over Q4 in FY19 and stood at 221,179 tonnes in Q4 of FY20.

The nationwide lockdown imposed by the central and state governments to control the spread of the disease led to a shutdown of the manufacturing facilities of the Company from March 25th, 2020 until May 4th, 2020. In compliance with the directives issued by the government, the Company resumed partial operations on May 5th, 2020 in a phased manner.

Impact on the nationwide economic sentiment will be reflected by the stainless steel sector as well, as it has a direct correlation with the GDP growth of the country. Moreover, disruption in the overall economic activity has led to interruption in the manufacturing process, upsetting the supply chain and planning. JSL believes that due to strong business fundamentals, this pandemic may not have a significantly adverse impact on the operations and performance of the Company in the long term. Furthermore, the company has also constituted an internal cross-functional COVID task force that is monitoring the situation on a real time basis for immediate course corrections and stabilising business operations.