India: JSW Steel's crude steel production, sales increase y-o-y in FY2024

Indian private steel major, JSW Steel's Indian operations saw crude steel production and sales volumes increased q-o-q in financial year 2024 (FY2024), BigMint learnt from company's investors call held on 17 May 2024.

During the fourth quarter of FY2024, the company's consolidated CAPEX expenditure amounted to INR 3,500 crores, totalling INR 16,752 crores for the fiscal year. For FY2025, consolidated CAPEX will be approximate INR 20,000 crores.

Update on projects

At Vijaynagar, we have successfully initiated operations at the hot strip mill (HSM), marking a 5 million tonne (mnt) brown field expansion. The commissioning was done in March 2024 and commercial production has begun at this mill.

The phase-2 expansion at Bhushan Power and Steel Limited (BPSL) is nearing completion. The manufacturer anticipates a ramp-up of production from this unit by October 2024. Alongside this, the company is looking forward to gradually increasing the production capacities of its Vijayanagar unit and BPSL this fiscal year.

Meanwhile, the commissioning of the colour-coated line at JSW Steel Coated Products based in Jammu and Kashmir is expected by Q2 FY2025. Progress on the 30 mnt slurry pipeline project in Odisha is also on track, with commissioning expected in FY2027.

Other highlights

Crude steel production increases y-o-y: The company's crude steel output stood at 25.55 mnt in FY2024, up 8% y-o-y from 23.62 mnt in FY2023 and have achieved 101% of production guidance. Also, the same rose by 3% y-o-y to 6.54 mnt in Q4 FY2024 compared with 6.37 mnt in the corresponding quarter of the previous fiscal.

The company's Indian operations has achieved a 93% average capacity utilisation in Q4 FY2024, making it 92% in FY 2024.

The guidance for FY 2025 stands at 28.4 mnt for production. Also the company will be taking a shutdown at its Vijayanagar-based blast furnace (BF) #3 for capacity enhancement this year.

Steel sales increase y-o-y: Steel sales increased by 10% to 23.96 mnt in FY2024 against 21.86 mnt in FY2023, which is 100% of sales guidance for the year. In Q4 FY2024 the same was 6.48 mnt , up by 2% from 6.35 mnt in Q4 FY2023.

The guidance for FY2025 stands at 27 mnt for sales.

In FY2024 domestic sales have surged by 8% y-o-y, while institutional sales have seen a remarkable increase of 11% y-o-y, and retail sales have also shown a positive trend, rising by 3% y-o-y.

Moreover, with a lion's share of 61% in company's total sales, the Value-Added Specialty Products (VASP) category recorded a remarkable annual increase of 19% in FY 2024.

Furthermore, construction and infrastructure sales have reached an all-time high, demonstrating an 11% y-o-y increase, while auto sales have increased by 5% y-o-y, marking the highest figures to date.

Operating EBITDA increases y-o-y: The company's operating Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) was recorded at INR 27,007 crores in FY2024, up by 51% on y-o-y basis against INR 17,903 crores in FY2023. However, in Q4FY2024 it fell by 22% y-o-y to INR 5,889 crores from INR 7,567 crores in Q4FY2023.

Operating costs impacted by raw material prices: The guidance for coking coal costs projected an increase of $20-25 in Q4 FY2024, and the company have observed a rise of $22, with the CFR cost of coking coal reaching $274 CFR. Despite the persistently high prices of iron ore, the company has effectively maintained control over iron ore costs in the last quarter. This achievement can be attributed to strategic measures such as optimised blends and consumption management, leading to an improved specific consumption rates.

In iron ore, the company fortified its position by securing 24 mines through diverse auctions, amassing a resource base of 1.6 billion tonnes (bnt) across these mines.

Of these, 13 mines are presently operational, while the remainder are undergoing various stages of commissioning. In the near to medium term, they are poised to augment the company's iron ore mining capacity in Karnataka from 7 to 15.5 mnt. This expansion entails an increase of Environmental Clearance (EC) limits by 4 mnt in existing mines and the gradual commissioning of 3 new mines, contributing an additional 4.5 mnt. Furthermore, upon their commissioning, the Goa mines are projected to contribute another 1 to 2 mnt.

Regarding coking coal, the company is currently in the process of commissioning 3 coking coal mines, poised to yield 2 mnt of clean coking coal. Additionally, the company has announced the acquisition of the MBR coking coal mine in Mozambique, subject to regulatory approvals.

Note: All Figures mentioned are for JSW Steel's India operations