India: Jindal SAW performance highlights in Q2 FY21

Jindal SAW Limited, a leading global manufacturer and supplier of Iron & steel pipe products, pipe accessories and pellets, with manufacturing facilities in India, USA and UAE (MENA), has announced its financial results for the quarter ended Sep 30, 2020.

Analysis of Q2 FY21 Production and Sales Tonnage (MT) break up for the quarter ended 30th September 2020 are as follows:

Key Highlights:

• Overall productivity in Q2 FY21: The Company produced 2, 63,500 MT of pipes & pig iron 3, 37,000 MT pellets o In line with its operational prowess and deep business lineage. Jindal SAW experienced robust order booking, primarily from the water sector, to the tune of INR 2,400 crore
• Improved order book position in Saw pipe segment: The Company produced 1.19 lac MT pipes as compared to 1.67 lac MT of pipes in Q2 FY20. The same was lower due to partial lockdown in various parts of the country resulting in supply chain disruption and changed focus of Govt. agencies towards medi-care projects to control the COVID-19 situation. The current order book stands at 5.05 lac MT, comprising of mix of orders 2.75 lac MT of HSAW and LSAW (HSAW orders are largely from the domestic water sector).
• Showing signs of good visibility in DI pipes and pig iron segment: Company has produced more than 1.13 lac MT DI Pipe as compared to 1.26 lac MT in Q2 FY20. However, Company experienced slow execution due to monsoon season, partial lockdown in various parts and other supply chain challenges with the customers. Current order book has increased to 5.70 lac MT of DI pipes which gives visibility for more than one year.
• Large order from defence sector in stainless segment in Q2 will open doors for other sectors: The current order book in this segment is 26,000 MT and is expected to build up well in line with revival of activity in respective end user industries like automobile and power sector
• Subdued performance of seamless pipe in Q2 FY21: On account of downward trend in the oil & gas sector, the performance of seamless pipes segment was subdued with the company producing 31,000 MT pipes in Q2 FY21 against 37,000 MT pipes in Q2 FY20
• The production of pellets ramped up in Q2: As the plant is operating almost full capacity, the production was ramped up gradually in Q2 FY 21. Meanwhile, the sale of pellets was 372,000 MT, compared to production of 337,000MT
• Company has booked new orders of INR 2,400 crore: Despite the COVID 19 challenges, during the Q2 FY21, as against Gross Sale of INR 1,930 crore, company has booked new orders of INR 2,400 crore. Major part of these orders has been booked in water sector
• Key developments in Q2 FY21:
  ~ UAE operations have become profitable in H1 FY21. Current order book is 2, 00,000 MT with confirmed LCs of USD 90 Mio. In H1 FY21, UAE operations are positive at net profit level.
  ~ Company has not availed the 2nd moratorium from the financial institutions and paid all the deferred payments of 1st moratorium to all the banks and financial institutions.

Outlook

The Company is making conscious efforts to move towards adding more value-added products, penetrate -new markets and increase production and productivity. Investments have judiciously been increased in higher ROCE segments, whilst de-subsidiarizing loss making entities in its fold. Jindal SAW’s ROCE trajectory therefore is set to show healthy improvement through active delivery against a robust strategy.