OREANDA-NEWS. May 14, 2012. JSW Steel Limited reported highest ever volume of production and sales in FY 12 and in Q4 FY12.

Performance Highlights: (Standalone)

 

G4FY 12

FY 12

Crude Steel production growth (YoY)

26%

16%

Saleable Steel Sales growth (YoY)

33%

28%

Net sales growth (YoY)

35%

39%

Operating EBITDA ( Crores)

1,652

5,631

Profit after tax Crores)

752

1,626

Net Total Debt gearing

0.69

Crude Steel production in FY12 and Q 4 was 7.43 million tonnes and 2.07 million tonnes respectively. Similarly Sales volume in FY12 and Q4 was 7.82 million tonnes and 2.31 million tonnes respectively.

Operational Performance: Sales and production volumes are as under:

 

(Million tonnes)

(Million tonnes)

Growl

h YoY

Products

Q4 FY 12

Q4 FY 11

FY 12

FY 11

Q4

FY

Production: Crude Steel

2.07

1.65

7.43

6.43

26%

16%

Sales:

-           Semis

-           Rolled: Flat

-           Rolled: Long Total Saleable Steel

0.09 1.76 0.46 2.31

0.07 1.39 0.27 1.73

0.41 5.95 1.46 7.82

0.34 4.70 1.06 6.10

21% 27% 70% 33%

19% 27% 38% 28%

During the initial phase of e-auctions, the Company faced severe shortage of iron ore at plants due to procedural delays, logistical constraints in movement of the ore even after securing the ore in e-auctions. If the Iron ore availability was not a constraint, the Company would have surpassed the initial guidance of Crude steel production of 8.75 million tonnes in FY 2011-12. The Company participated in the e-auctions and bought Iron ore even-though the ex-mine price for various grades of ore is kept at a relatively higher level. The Company received 75% iron ore at plant's site as on 31.03.2012 out of total Iron-ore of 10.7 million tonnes secured in e-auctions.

The availability of iron ore remained a bottleneck for most part of the FY 2011-12 due to NMDC not able to produce and supply 1 million tonnes per month as directed by Apex Court and the quality of iron ore available in E-auctions from stock piles got deteriorated substantially which together led to loss of production and increase in cost.

Financial Performance (Standalone)

The Turnover and Net Sales for the quarter stood at 10291 Crores and 9511 Crores, respectively, showing a growth of 35% over the corresponding quarter of previous year. The Operating EBITDA for the quarter was 1652 Crores and the Company has posted a Net Profit after Tax of 752 Crores after considering exceptional item (Foreign exchange translation gain) of 199 Crores.

The Company's Gross Sales, Operating EBIDTA and Net profit for the Financial Year 2011- 12 was 34658 Crores, 5631 Crores, and 1626 Crores respectively.

The Company's net debt gearing improved to 0.69 as on 31.03.2012 against 0.75 as on 31.12.2011 and the weighted average interest cost of debt was at 8.19% (vis-a-vis 7.63%, as on 31.12.2011).

Subsidiaries / Associates performance: Chile Iron-ore mines:

The Chile Subsidiary Company made shipments of 0.59 million tonnes of Iron ore concentrate during FY12 and 0.10 million tonnes in Q4 FY12, through dry process route. The Company earned an Operating EBITDA of USD 26.10 million and USD 0.89 million for the corresponding period.

US Coal mines:

The US Subsidiary Company sold 0.047 million tonnes of Coal during FY 12 and 0.020 million tonnes in Q4FY12. The Company is pursuing to obtain statutory clearance / permits to ramp up production.

US Plate and Pipe Mill operation:

The US Plate and Pipe Subsidiary produced 0.33 million net tonnes of Plates and 0.066 million net tons of Pipes in FY12, showing growth of 177% and 57% respectively over FY11. The production in Q4 FY12 for Plates and Pipes was 0.108 million net tonnes and 0.023 million net tonnes respectively. The Company earned, including other income, an EBITDA of USD 56.01 million during FY12 and USD 42.56 million during Q4FY12.

JSW Sspat Steel Ltd. (JSWISL):

HR Coils production during 12 months period ended 31st March 2012 was 2.38 million tonnes and during January to March'12 was 0.59 million tonnes. The sales volume in the corresponding periods was 2.75 million tonnes and 0.71 million tones respectively.

EBITDA for the 12 months period ended 31st March 2012 was 1,126 Crores and for January to March'12 was 294 Crores. The Net Loss for the corresponding periods after considering Exceptional items was 1,930 Crores and 141 Crores respectively.

Consolidated Financial Performance:

Gross Sales in FY12 rose by 42% to 36720 Crores and Net Sales increased by 43% to 34124 Crores as compared to FY 11. For Q4 FY12, Gross Sales increased by 40% to 0,930 Crores and Net Sales increased by 41% to 10153 Crores as compared to Q4FY11.

Operating EBITDA for FY12 was 6102 Crores and for Q4FY12 is 1887 Crores.

Net Profit after Tax for FY12 was 538 Crores and for Q4 FY12 was 770 Crores. The consolidated net profit was lower than the stand alone net profit majorly due to accounting of proportionate losses of associate Company viz. JSW Ispat Steel Limited.

The Company's consolidated net debt gearing as on 31.03.2012 improved to 0.98 against 1.08 as on 31.12.2011.

Projects Update:

Captive Power Plant (CPP IV): 300 MW CPP plant commenced commercial operations from 29th March 2012.

Hot Strip Mill (HSM - 2, Phase II): To expand the capacity from 3.5 MTPA to 5 MTPA will be completed by 30th September 2012.

Beneficiation Plant (BP, Phase-2): Balance 4 modules are progressing satisfactorily and will be commissioned in FY 13 in phased manner.

Other Projects: Cold Rolling Mill (CRM-2) and 10 MTPA to 12 MTPA capacity expansion project at Vijayanagar will be completed in FY 14.

Considering the Company's performance and financial position for the year under review, the Beard, subject to the approval of the Members at the ensuing Annual General Meeting, has recommended dividend of per share on 27,90,34,907 10% Cumulative Redeemable Preference Shares (CRPS) of 10 each, for the year ended 31.03.2012.

The Board has, further, recommended dividend at 7.50 per equity share on the 22.31,17,200 equity shares of П0 each for the year ended 31.03.2012, subject to the approval of the Members at the ensuing Annual General Meeting

The total outflow on account of equity dividend including corporate tax on dividend is 94.49 Crores, vis-a-vis 317.66 Crores paid for FY 11.

Outlook

Global economy is currently navigating through Euro zone structural issues, slow down in China and fiscal deficit, inflation challenges in emerging economies.

Whilst steel demand globally is expected to be sluggish in certain parts of the world, including India, base level steel demand is expected to remain strong.

Slowdown in China and recessionary trends in Europe will keep raw material prices stable. Also supply side corrections in high cost regions will keep steel prices in a narrow range.

Dividend:

India showed a growth in steel consumption of 6.8% in FY 2011-12 as per the report of Joint Plant Committee, near to GDP growth of 6.9%. While prediction of good monsoon in the current year and expected easing / stable interest rates are positives to spur economic activity in the country, the slow down in industrial activity and the resulting falling investment climate will remain challenges to achieve accelerated growth in steel consumption in the current Financial Year. At this backdrop it is expected that the steel demand will continue to be around 7.5% tracking the expected GDP growth of 7.6% in FY 2013.

Guidance:

The Company has given a guidance in FY 2011-12 on Crude Steel production of 8.75 million tonnes and saleable steel sales of 9 million tonnes. Following the ban on iron ore mining in the State of Karnataka by the Apex Court, the Company revised the guidance to 7.5 million tonnes and 7.8 million tonnes respectively for production and sales. In spite of several challenges the Company could achieve the revised guidance during the FY 2011-12 solely due to reliefs to steel industry in Karnataka region extended by Hon'ble Supreme Court / Central Empowered Committee / Monitoring Committee.

.As the Central Empowered Committee has recommended for opening of Category A' and Category 'B' mines and the Hon'ble Supreme Court accepted CEC recommendation for opening category A' mines with certain riders. Category 'B' mines as recommended by CEC, if approved by the Hon'ble Supreme Court, and Category 'A' mines together on commencement of operation are expected to improve availability of iron ore. Accordingly the following targeted volume of production and sales are worked out for FY 2012-13.

Products (Quantity in Million Tonnes)

FY 11-12 Actual

FY 12-13 Estimates

Growth

Production :

 

 

 

Cast Products

7.43

8.50

14%

Saleable Steel

 

 

 

Rolled-Flat

5.95

6.82

15%

Rolled-Long

1.45

1.80

23%

Semis

0.41

0.38

(7)%

Total

7.82

9.00

15%