Jindal Steel and Power Ltd (JSPL) has set the steel production guidance at 8.2-8.4 million tonnes (mnt) for FY23, SteelMint learnt from the company’s investor call held on 15 July 2022. To achieve the same, the company will not take any shutdown till March 2023, except for cases which involves breakdown and are unavoidable.
JSPL is not facing any raw material shortage currently because they have adequate quantity as far as coking coal or PCI coal is concerned. Moreover, Indian government has banned exports of pellets and iron ore, hence, abundance of minerals are available in the country.
Perspective on export duty: JSPL has welcomed the government’s decision of exports duty on steel and its raw materials and is focusing on catering the demand in the domestic market. Steelmaking raw material prices have come down vis-a-vis the input costs too have come down.
In addition, the company plans to maintain its export share more than 20% out of total production this year by exporting more value-added products for which end-users do not hesitate paying higher value.
JSPL also plans to enter niche markets such as Canada, USA etc. For instance, Canada, they aim to be largest supplier of the specialty beams for the highrise buildings.
Production falls 6% q-o-q: JSPL’s production declined by 6% to 1.99 mnt in Q1FY23 as against 2.11 mnt in the previous quarter. The same dropped marginally by 1% y-o-y against 2.01 mnt in Q1FY22.
The drop in production was mainly due to maintenance shutdown of the plate mill in Raigarh plant as well as unavailability of thermal coal as a result of which company’s DRI production got impacted at its Angul works.
Steel sales down 16% q-o-q: Steel sales by JSPL stood at 1.74 mnt in Q1, down 16% q-o-q against 2.08 mnt in Q4FY22, impacted because of the imposition of export duty.
“We started off with a soft April and during May we had the imposition of the export duty. Both our domestic and export volumes have been impacted during the quarter. Our domestic volumes were lower by around 12% and our export volumes were lower by around 28% during the quarter,” said Mr. Ramkumar Ramaswamy, CFO JSPL.
EBITDA up 15% y-o-y: The company’s adjusted EBITDA registered a rise of 8% to INR 2,865 crore in Q1FY23 as against INR 2,657 crore in the previous quarter. The increase was mainly driven by healthy realisations and offset by lower volumes and increased costs.
Inventory: JSPL mentioned that their order books are good for next four to five days and they are not carrying any inventory. They are producing according to the order books. Moreover, they mentioned that there is a shortage of plates in the country.
Steel major has paid about INR 113 crores of export duty and has cleared all inventories. The company is now focusing on producing value-added goods through which they can recover a major part of the export duty paid.
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