India: Jindal Stainless Hisar posts INR 50 cr loss in Q1

Jindal Stainless (Hisar) Limited (JSHL) has posted a loss of INR 50 crore in April-June or Q1 of FY21 as against INR 84 crore net profit recorded in the corresponding period of last year (CPLY).

Net revenue and Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) stood at INR 743 crore and INR 40 crore respectively. Finance cost however, fell by 15% over CPLY to INR 68 crore. During the quarter, sales volume dipped by 69% over CPLY to 47,414 tonne in Q1FY21, while the melt production dropped by 79% to 33,276 tonne. The company was also adversely impacted due to continued subsidized imports of stainless steel flat products and pipes & tubes, chiefly from FTA/ASEAN (Free Trade Agreements/Association of SouthEast Asian Nations) countries. Total imports from Indonesia alone rose by 18% over the sequential quarter.

The performance was severely impacted due to nationwide lockdown, limited operations, and disruption in supply chain on account of the outbreak of pandemic, and its cascading effects on economic activities.

Commenting on the results, Managing Director of JSHL, Mr Abhyuday Jindal, said, "This quarter was unprecedented for not just stainless steel, but the entire economy. We are closely monitoring the situation and calibrating our decisions accordingly. Though we started seeing signs of recovery towards the end of the quarter, our chief focus was to optimize costs on all fronts. The long term potential for stainless steel in India remains intact and we expect a stronger recovery in domestic demand sooner than later."

JSHL adopted a two-fold approach to optimize its sourcing and distribution functions. On one hand, the Company developed domestic sourcing partners to mitigate input price fluctuation, reduce working capital requirement, and cut down on lead time. On the other hand, the company consolidated its distribution network and expanded capacity of warehouses in critical locations to maintain its competitive edge. JSHL sustained its focus on improving its product mix of value-added products.

The stainless steel industry in India has been recovering at an encouraging pace. Demand in the auto segment is picking up speed, especially that for two-wheelers. Resumption in construction activities has been supportive to the decorative pipes & tubes segment. As unfinished projects start taking shape again, industrial fabrication is expected to bounce back to pre-COVID levels. The upcoming festive season is also likely to lift demand from retail facing segments such as hollowware (utensils and tableware). Conventional demand drivers of stainless steel, namely construction, transportation, and process industries, are also inching towards normalcy.