JSPL upbeat on domestic demand, posts robust sales growth

Leading integrated steel producer Jindal Steel and Power (JSPL) has a sales target of 7.5 MnT in the current fiscal, out of which domestic and exports sales will have an equal share of 50:50, informed V.R. Sharma, Managing Director of the company, during a short tete-a-tete with SteelMint.

Soaring Sales

Currently, exports sales hover above 62%: total sales recorded by JSPL in May 2020 stand at 642,000 MT, with total exports being a little above 0.4 MnT.

It certainly deserves mention that out of 401,000 MT of exports in May over 312,000 is in the form of billets and blooms. So, exports of semi-finished products accounted for over 77% of total exports last month.

As Sharma succinctly puts it: "Exports saved us during this global crisis."

However, the ratio of exports to domestic sales that currently is 60:40 will change to 50:50 in the short term.

Banking on Domestic Demand

Sharma alluded to revival in domestic demand as the main driver for consolidated sales growth, which was recorded at 26% Y-o-Y.

"JSPL's largest production is plates, specialty plates for warships, hydropower plants and for shipbuilding and construction of tanks for the defence sector. This is a big business of about 2.5 MnT per annum capacity. Production of rails is another significant business vertical with a capacity of about 1 MnTPA," said Sharma.

"JSPL also specialises in the production of heavy structures - 900 MM beams. The production capacity is 500,000 MT per annum," he informed. "We also manufacture about 500,000 MT of angle iron for Power Grid Corporation of India Limited."

"In addition, JSPL manufactures round billets used in the production of seamless pipes - the annual capacity stands at 1 MnT. Our annual production capacity of rebars is 2 MnT," he informed.

JSPL is optimistic of infrastructure demand picking up with relaxation in lockdown restrictions and is confident of recording healthy domestic sales, due partly to the fact that it doesn't produce galvanized steel or steel used in making car bodies and is, therefore, relatively insulated from demand depression in these sectors.

Same Machines, Higher Output

Sharma exuded confidence that the 18% demand contraction in India in 2020, as projected by World Steel Association recently, would not have any major bearing on JSPL.

Similarly, the steel manufacturer's Oman plant, with a capacity of 2 MnT per annum, registered robust production during the lockdown, he informed.

JSPL's crude steel production target of 8 MnT in FY21 remains unchanged, even without any new investments being envisaged in the ongoing fiscal.

"The same machines will come up with higher output," he said. Notably, the expected hike in crude steel output target is significant compared to 6.2 MnT in FY20.

~ By Nirmalya Deb