Jindal Stainless FY19 profit dips by 56 percent

In the fourth quarter of FY 2018-19, JSL registered a 38 percent drop in PAT at Rs 32.2 crore as opposed to Rs 52 crore in the corresponding period a year ago

New Delhi: For the entire financial year 2018-19, Jindal Stainless Limited (JSL) recorded a profit after tax (PAT) of Rs 139 crores, down by 56 percent from Rs 318 crores in FY 2017-18. In the fourth quarter of FY 2018-19, JSL registered a 38 percent drop in PAT at Rs 32.2 crore as opposed to Rs 52 crore in Q3 of FY2018-19.

What explains the dip in PAT?

It's noteworthy that the consortium of CDR (Corporate Debt Restructuring) lenders has agreed to allow CDR exit for the company with effect from March 31, subject to requisite approvals from their respective competent authorities. The aggregate liability of recompense as on March 31 was determined at Rs 191 crore as per extant guidelines. The company made an incremental provision for Rs 57 crore in Q4FY19 vs Rs 27 crore in Q3FY19. With this, the entire recompense liability as on March 31 is fully provided for. Accordingly, the PAT dipped by 38 percent.

Annual sales volume and net revenue grow by 9%

The annual sales volume and net revenue grew by 9 percent and 17 percent respectively. Despite the pressure on margins exerted by subsidised imports, JSL could manage to maintain its leadership position in the domestic stainless steel market during FY 18-19. However, EBIDTA margins continued to be under pressure, which adversely impacted the company's profitability. The net worth of the company stood at Rs 2,475 crore, up by around 5 percent over FY 17-18.

Increased protectionism, decline in Nickel prices kept prices under train

Decline in Nickel prices globally for seven consecutive months during FY 18-19 kept prices under pressure. Moreover, increased protectionism across US and EU further hindered international trade. For the domestic stainless steel industry, FY 2018-19 was fraught with severe distortion in prices as imports rose in a big way from FTA nations like Indonesia, Korea, and Japan. This was clearly reflected in India's trade balance with Indonesia, as  Indonesian imports leaped by ~14 times in FY 18-19, as compared to the previous financial year. This surge in stainless steel imports from Indonesia became one of the biggest threats for domestic industry during FY 18-19.

In the lack of an anti-circumvention law on CVD, re-routing of Chinese origin material through various countries in ASEAN region continued unabated during the quarter and the year. Over and above this, the competitiveness of the industry was also affected on account of low import duty on finished stainless steel flat products (7.5 percent) as against the import duty on finished steel products (12.5 percent).

'CDR exit will give us more opportunities'

Managing Director, Jindal Stainless Limited, Abhyuday Jindal, said, "CDR exit will give us more opportunities to consolidate our financial and leadership position. We are now looking forward to an intervention by the Indian Government to create a level playing field for Indian manufacturers. The industry needs government support to compete with rampant dumping by FTA and other countries…. We need active government support to bring alive the Make in India vision and create more jobs for the domestic economy."