India: JSW Steel achieves highest ever production, sales in FY23

Indian private steel major JSW Steel has achieved its highest ever production and sales volume in FY23 and Q4FY23, SteelMint learnt from company's investors call held on 19 May 2023. The company has set FY24 crude steel production guidance at 25.5 mnt and sales at 24.2 mnt for India operations including Joint Control.

The domestic capex spent was INR 14,214 crores for FY23 and INR 3,507 crores during the quarter. The company expects to spend around INR 19,000 crores in FY24 primarily on completing expansions like Vijayanagar brownfield expansion, BPSL phase-II expansion and downstream facilities.

Update on projects-

• The expansion of 5 mntpa is progressing well at Vijayanagar plant and expected to be completed by end of FY24.
  
  
• The phase-I expansion from 2.75 mntpa to 3.5 mntpa at BPSL was completed in FY23 and phase-II expansion from 3.5 mntpa to 5 mntpa remains on track for completion in FY24.
  
  

Highlights-

Crude steel production up y-o-y: The company's standalone crude steel production rose by 18% y-o-y to 20.87 mnt in FY23 as against 17.62 mnt in FY22. On a quarterly basis, output rose by 5% to 5.6 mnt in Q4FY23 from 5.32 mnt in Q3FY23, primarily due to better utilisation of Dolvi phase-II.

The company operated with capacity utilisation of 96% in Q4 and 90% in FY23. Better operating efficiency and improved availability of iron ore added to better performance of BPSL.

Highest ever domestic sales: Steel sales increased 19% y-o-y to 19.67 mnt in FY23 as against 16.52 mnt in the previous fiscal. The same rose 15% on the quarter to 5.68 mnt in Q4 from 4.95 mnt in Q3, led by retail and OEM segments. The company's sales in auto segment grew by 7% q-o-q to 6,82,000 t in Q4 and up 36% y-o-y to 2.6 mnt in FY23.

The steel major achieved its highest ever domestic sales volume with a pick up in exports in the last quarter and better domestic demand. Exports accounted for 11% of total sales in Q4.

Operating EBITDA plunges: Operating EBITDA plunged by 52% y-o-y to INR 15,371 crores in FY23 as against INR 31,868 crores in FY22. On a quarterly basis, the same registered a 55% growth to INR 6,247 crores in Q4 as against INR 4,030 crores in the preceding quarter.

In addition, EBITDA margins increased to 16.8% in Q4 from 13% in Q3. This was due to higher sales, higher NSR, and lower power and fuel costs.

Coking coal costs: There was a drop of $6/t in coking coal costs to $274/t in Q4FY23 as against $280/t in the previous quarter. The company expects coking coal prices to go up by $10-15/t in Q1FY24 against Q4FY23.

Inventory reduction: The company achieved a reduction of 3,50,000 t in inventory in Q4FY23 post built up in the last nine months. The inventory levels were at 1.69 mnt as on 31 March, 2023 and there is much scope of inventory reduction in FY24.

Value-added steel: The company is focusing on addition of capacities for value added steel products to the portfolio. New CAL line was added at Vasil, tin plate-II mill got commissioned at Tarapur and LRPC facility of wires is getting ramped up quite well. Also, the special steel longs capacity at Jharsuguda is expected to come this year.