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JSL’s net profit plunges 26% in Q1FY20 year-on-year

On a sequential quarter basis, Jindal Stainless Steel’s Q1FY20 PAT registered a two-fold growth compared to Q4FY19
New Delhi: In the June quarter of financial year 2019-20, Jindal Stainless Limited (JSL) recorded Profit After Tax (PAT) and EBITDA at Rs 67 crore and Rs 314 crore respectively, recording a 26 percent and 16 percent decline respectively over the corresponding period of the last financial year. Net revenue, at Rs 3,067 crores, remained nearly flat compared to the corresponding period last year. Total sales volume during the first quarter of the current fiscal year stood at 2,22,119 tonnes.

Two-fold growth compared to Q4FY19

On a sequential quarter basis, Q1FY20 PAT registered a two-fold growth compared to Q4FY19. EBIDTA for Q1FY20 rose by 4 percent over Q4FY19. The quarter also witnessed an exceptional gain of Rs 24 crore primarily on account of forex movement. Q1FY20 melt production was recorded at 245,416 tonnes, an increase of 9 percent over Q4FY19. The consistency in financial performance was achieved despite weak growth in certain macro-economic segments, a statement said.

‘Performance indicates strong financial position’

Commenting on the performance of the quarter, Managing Director, JSL, Abhyuday Jindal, said, “Our performance in the first quarter indicates our strong financial position. The outlook for the business remains positive with the outlay of significant investments by the government in the Union Budget for Railways and infrastructure. However, we continue to face a challenge from high levels of imports, particularly from FTA countries like Indonesia and Vietnam. In the wake of these emerging business challenges, we have carried out an internal restructuring to sharpen our key focus areas. We have created a centralised team to serve as a knowledge bank, carve out new stainless steel applications through conversion from other materials, and develop new markets.”

Countering the counterfeit

Railways and special grades segments led the demand in the first quarter of this fiscal. For the first time ever, the company launched a co-branding scheme with more than 60 customers in pipe and tube segment. The initiative entails the right to use JSL’s logo along with the pipe & tube manufacturer’s logo in order to staunch the counterfeit market and increase the company’s and its customers’ share of wallet.

Indian stainless steel market faces a threat

The Indian stainless steel market is currently facing a serious threat from subsidised imports. Indonesian imports, which had leaped by ~14 times from FY18 to FY19, remained a grim concern in Q1FY20 as well. Indonesian imports accounted for over 28 percent of total imports into India during the quarter. Considering high injury levels caused by dumped and subsidised imports, the government has initiated an anti-dumping duty investigation in July 2019. The investigation will cover all stainless steel flat products from major exporting countries, such as Indonesia, China, Korea, Japan, Taiwan, etc. The investigation covers both ASEAN nations and FTA nations from where stainless steel imports are essentially duty-free. The benefits of the FTAs with Japan, Korea and ASEAN nations have been one-sided for the stainless steel industry, leading to trade deficits between the partner countries and India. “The domestic industry is hopeful that the government will set right this unabated dumping into India. Without government support, operations of Indian manufacturers will turn unviable, leading into a downward spiral of production closures and job losses,” the statement said.