India: JSPL's production and sales recorded an all-time high in FY '21

India's leading steel mill-Jindal Steel & Power Ltd (JSPL) announced its FY '21 results in an investor's conference call today. The company produced 7.51 mn t in FY '21, up 19%, and sales at 7.28 mn t, up 20% y-o-y in FY '21.

Major highlights of FY '21 are as follows:

1.Production and sales recorded a jump in FY '21-JSPL's, production (incl. pig iron) in FY '21 increased by 19% y-o-y to hit a record of 7.51 million tonnes (vs 6.30 mn t in FY '20) while Standalone Steel (incl. pig iron) sales also reached the highest ever level of 7.28 mn t, up 20% y-o-y.

2.Healthy export volumes in FY '21-Lucrative export markets during the year resulted in JSPL exports rising by 226% to 2.53 mn t in FY '21, accounting for 35% of the overall sales against 13% in FY '20. Low demand in the domestic market due to the lockdown on rising cases of COVID infections, and higher realization in the overseas market led to a shift of focus towards export trade.

3.Generates highest-ever EBITDA-Improving prices, higher volumes, and better cost efficiencies have resulted in JSPL's EBITDA hitting a record of INR 13,055 cr. Record operating profit and declining interest expense have contributed to JSPL's net profit reaching the highest ever level of INR 7,154 cr in FY '21.

4.JSPL clocks standalone PAT at INR 7,154 cr in FY '21-Jindal Steel and Power (JSPL), has reported a manifold jump in its consolidated profit after tax (PAT) during the whole FY '21 and the quarter ended Mar '21, mainly on account of higher income, SteelMint learned from the recent BSE filing.

The manufacturer has reported its PAT at INR 7,154 cr for FY '21 as against INR 618 cr in FY '20.

5.JSPL is all set to double its steelmaking capacity at Angul-JSPL is all set to double its steelmaking capacity at Angul, Odisha to 12 mn t per annum (from 6 mn t per annum currently), raising its India crude steel capacity by 66% to 15.9 mn t per annum. To improve its product mix, JSPL is also planning to construct a 5.5 mn t per annum Hot Strip Mill (HSM), which will significantly increase the company's flat steel making capacity from 2.2 mn t pa currently to 7.7 mn t pa.

Also, the company plans to construct a slurry pipeline between Barbil-Angul(200 kms) in conjunction with a 12 mn t pa pellet plant in Angul(2 phases of 6 mnt pa each), which would reduce iron ore logistic costs and bring in additional cash flows from pellet sales.

6.Focus to become a debt-free company-Jindal's unflinching focus on strengthening the balance sheet has resulted in consolidated net debt declining further by INR 13,773 cr in FY '21 and INR 3,475 cr in Q4. As of Mar '21, JSPL reported consolidated net debt of INR 22,146 cr. It has announced substantial prepayment of INR 2,462 cr to its term lenders in early May '21.

7.Company's guidance for next fiscal year-JSPL is aiming to achieve around 8 mn t crude steel production in next fiscal year.

8.Production and sales of pellets-Pellet production in Q4 FY '21 increased 7% on yearly basis. External sales of pellets however reduced to 0.29 mn t down by 38% on yearly basis due to higher internal consumption as production ramps up. The Pellet operations at Barbil also reported a record production of 7.76 million tonnes in FY '21 (vs. 7.28 in FY 20). However, with the ramp-up of the India steel operations, external sales of 2.25 million tonnes were lower (-5% y-o-y).

9.JSPL recently proposed divestment of JPL-JSPL recently proposed divestment of JPL to Worldone Private Limited for an all-cash equity value consideration of INR 3,015 Cr. Post JPL divestment, JSPL will transform all its operations in India - one of the highest growth economies globally. The divestment will significantly help JSPL reduce emissions, strengthen its balance sheet via debt reduction, shift the entire management focus on the company's strong domestic steel business and improve return ratio's for our investors as we progress towards becoming a net debt free company.

Outlook-

Owing to slowdown in construction activities within the country and diversion of oxygen supply has resulted in lower production and sales recently. However strong global market and largest vaccination drive has encouraged steel demand and pricing outlook for FY '22.