India: JSPL posts 13% production growth in Q3FY'23

Jindal Steel & Power Limited (JSPL) has posted 13% q-o-q growth in production, while sales dropped 6% q-o-q in Q3FY'23, SteelMint learnt from the company's investors call held on 31 January, 2023. The company sees robust improvement in its order book with the removal of export duty in November last year. Furthermore, it aims to decarbonise and eventually become a net-zero emission company.

Update on projects:

• The pellet plant of 6 mnt per annum capacity at Angul is close to commissioning based on earlier clearances. The trial and testings are currently going on and the plant is likely to be commissioned this quarter.
  
  
• The clearance for coal mines is currently under process while the contractor and equipment are ready.
  
  
• The slurry pipeline is a big project half of which is completed. It is likely to be commissioned by Q2 or Q3 of FY'24.
  
  
• The hot-strip mill will be commissioned by Q2FY'24 and the blast furnace by the end of Q3FY'24.
  
  

Other highlights:

Production rise q-o-q: The company's production rose by 13% q-o-q to 2.06 mnt in Q3FY'23 as against 1.82 mnt in the previous quarter. The same was up by 5% y-o-y from 1.96 mnt in Q3. However, during April-December 2022 (9MFY'23), production volumes edged lower by 1% on the year to 5.87 mnt compared with 5.90 mnt in the same period last year.

All the plants operated with optimum capacity during the quarter and the Angul plant created a world record by providing 54 heats in a day in October 2022.

Steel sales fall q-o-q: Steel sales stood at 1.90 mnt in Q3, down 6% from 2.01 mnt in the preceding quarter, driven by issues around rake availability and dispatches. However, sales rose by 4% y-o-y compared with 1.82 mnt in Q3. During 9MFY'23, sales volumes edged higher by 2% y-o-y to 5.65 mnt from 5.56 mnt seen in corresponding period of last year.

Exports accounted for 5% of sales in Q3 against 11% in Q2 due to continuation of export duty till 19 November and weak demand in the global market.

EBITDA up q-o-q: The company's adjusted EBITDA registered 52% growth on the quarter to INR 2,163 crore in Q3 as against INR 1,426 crore in the previous quarter. The rise in EBITDA was driven by the company's overall cost reduction in steel production by around 9% majorly due to a variety of raw material mix used (thermal coal, coking coal, iron ore).

Net sales realisations (NSR): The company's net sales realisations (NSR) edged lower by 1% during the quarter amid the softening in steel prices in Q3. Meanwhile, realisations are inching up by 1-2% as steel prices are firm now.

Operational costs: The cost of steel melting shop (SMS) declined by 9% on the quarter majorly due to reduction in coking coal prices by 18% and lower thermal coal prices by 17%. Meanwhile, prices of iron ore remained flat during the quarter.

Capex for Q3 and 9MFY23: The company has made investments of INR 939 crore in Jindal Steel Odisha, INR 642 crore in Jindal Steel & Power's growth and sustainance projects and INR 410 crore in Monnet during Q3.

During the first nine months of FY23, an investment of INR 2,708 crore was made for Jindal Steel Odisha, INR 1,566 crore for Jindal Steel & Power Ltd. (JSPL) and INR 410 crore for Monnet.

Submission of EoI for NMDC Steel Plant: JSPL along with its peers like JSW Steel, Tata Steel, Vedanta and Essar Group have submitted their expressions of interest (EoIs) for NMDC Steel Plant. The greenfield plant with an annual capacity of 3 mnt per annum is expected to be commissioned by the end of the current fiscal. The central government will sell 50.79% of its 60.79% stake in the Nagarnar-based NMDC steel plant that is being set up with an investment of INR 20,000 crore.