New Delhi: The Board of Directors of Jindal Stainless Limited (JSL) on Monday approved the financial results of the company for Q1 FY22, which registered strong growth over the corresponding period last year (CPLY) owing largely to a low base effect. Sales volume grew by 168 percent over CPLY to 237,852 tonnes in Q1FY22. JSL's EBITDA and profit after tax (PAT) stood at Rs 580 crore and 271 crore respectively.
The Company further accelerated its deleveraging strategy during the quarter and reduced its long-term external debt (excluding group company JSHL's debt) by INR 210 crore. Net Lenders' debt (excluding group company JSHL's debt) as on June 30, 2021 stood at Rs 1,445 crore. During Q1FY22, interest cost was reduced by 38 percent over CPLY to Rs 81 crore.
Q1FY22 witnessed a further increase in raw material prices and freight costs globally. Ferro Chrome and nickel prices continuously rose globally. Stainless steel demand in Q1FY22 was impacted by state-wise lockdowns due to the second COVID wave. Demand in key segments like Auto, Pipe & Tube segment, Railways, and special grades started to stabilize towards the end of the quarter. Outlook for stainless steel demand remains robust on the back of faster vaccination drive, improvement in the availability of liquidity, and overall economic recovery spurred by improved business sentiments and infrastructure stimulus by the government.
The company increased its share of export sales to cover the temporary challenges in the domestic market during the Covid restrictions/localized lockdowns in Q1FY22. The domestic-export share of sales volumes during the quarter, on a YoY basis, was:
The Board of Directors approved a brownfield expansion plan for JSL to leverage the ready availability of world-class infrastructure in Jajpur, such as land, roads, railways, utilities etc. Equipped with necessary environmental and statutory clearances, JSL offers immense opportunity for organic growth, largely addressing the risks pertaining to cost, time, technology, and process in any expansion activity.
The estimated CAPEX of this brownfield expansion is Rs 2,150 crore, which is less than one-third of the greenfield CAPEX cost for the corresponding enhancement. The three-pronged expansion plan constitutes an expansion of melting capacity, and commensurate strengthening of backward and forward linkages:
Melting Capacity: 2x expansion of steel melting capacity – from existing 1.10 MTPA (million tonnes per annum) to 2.10 MTPA – at an estimated CAPEX of Rs 530 crore. Estimated completion by Q3FY23.
Downstream enhancement: Commissioning Combo Line for downstream expansion. 1.5x expansion of HRAP (Hot Rolled Annealed Pickled) capacity and 1.7x expansion of CRAP (Cold Rolled Annealed Pickled) capacity. HRAP and CRAP capacities to be enhanced from 0.8 MTPA and 0.45 MTPA to 1.25 MTPA and 0.75 MTPA respectively at an estimated CAPEX of Rs 1,250 crore. Estimated completion by Q4FY23.
Backward integration: 1.4x expansion of ferrochrome capacity – from 0.25 MTPA to 0.35 MTPA to scale up backward integration and cost efficiency at an estimated CAPEX of INR 315 crore. Estimated completion by Q3FY24.
The remaining CAPEX will be expended on enhancing quality assurance for new generation grades in high-end segments, balancing of units, and other necessary improvement activities.
3. Merger process: After obtaining necessary approvals from the stock exchanges and SEBI, Company has filed the first motion application before the NCLT. The petition is expected to come up for hearing soon.
4. After the suspension of Countervailing Duty (CVD) in the Union Budget in February 2021, the share of imports in the domestic market in Q1FY22 increased to 34% over the sequential quarter, which was 24% in Q4F21. Domestic industry is pursuing its case of a level playing field with the government continuously.
5. In a first-ever development, CRISIL Ratings has assigned 'CRISIL A+/Stable' rating to the long-term credit facilities of Jindal Stainless Limited (JSL). Short-term credit facilities of JSL have been rated 'CRISIL A1'. Additionally, India Ratings and Research (Ind-Ra) has upgraded Jindal Stainless Limited's (JSL) long-term credit rating to 'IND A+', three levels up from their earlier rating of 'IND BBB+'. The short-term credit rating of the company has also been upgraded to 'IND A1+'. Accelerated deleveraging, prepayments of debt along a strong operating performance were key reasons for the upgrade.
6. JSL has increased its capacity to despatch up to 50 MT of Liquid Medical Oxygen (LMO) daily from the Company's Jajpur facility to meet the demand of LMO in Odisha, Andhra Pradesh, Haryana, and other states, as required.
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