Jindal Steel & Power

In the quarter ended Dec 2011, Jindal Steel & Power (JSPL) reported 7% growth in consolidated net profit to Rs 996.68 crore - in line with market expectations. The net profit was largely impacted by weak operating performance on account of high steel inventory, increased imports of sponge iron (HBI) from Oman plant, spike in coking coal price coupled with sharp rupee depreciation.

The consolidated topline grew by 37% to Rs 4357.69 crore on improved steel sales. The consolidated OPM crashed by 1040 bps on above reasons resulting in constrained 9% growth in operating profit to Rs 1742.12 crore.

Healthy steel & iron sales lifted the consolidated topline by 37% to Rs 4357.69 crore in Dec 2011 quarter. The sales of steel & iron grew by notable 47% to Rs 3406.79 crore primarily aided by impressive pellets sales followed by steel products though it was constrained by notable downfall in metallics (DRI & pig iron). The pellets sales grew by whopping 124% to 4.64 lakh tonne from 2.06 lakh tonnes in Dec 2010 quarter. The sales of steel products (i.e. slabs, bloom, billets etc) grew by 18% to 5.90 lakh tonnes. Only sales of metallics crashed by 59% to 38510 tonnes in Dec 2011 quarter. The power sales grew by 9% to Rs 1155.22 crore.

The consolidated OPM crashed by whopping 1040 bps to 40% primarily on exceptional spike in raw material costs. The raw material costs, as % to sales net stock adjusted, increased by whopping 1050 bps owing to four factors - one high inventory across the steel due to sluggish market; increased import of sponge iron (HBI) from Oman plant, spike in coking coal prices and sharp rupee depreciation. In effect, the operating profit growth was drastically limited to 9% to Rs 1742.12 crore. The margin of iron & steel fell by 310 bps to 29% thereby limiting growth in its PBIT to 33% to Rs 995.51 crore. On the other hand, crash in PBIT margin of power segment by 870 bps to 62% pulled down its PBIT by 4% to Rs 719.55 crore.

The consolidated PBT after EO grew by 8% to Rs 1335.06 crore aided by impressive other income and EO income though constrained at depreciation and interest costs levels. The other income grew by whopping 389% to Rs 42.57 crore. It earned EO income of Rs 25.94 crore against none in Dec 2010 quarter. On the other hand, depreciation cost grew by 13% to Rs 331.31 crore while the interest cost grew by whopping 78% to Rs 144.26 crore. Further hike in effective tax rate by 100 bps limited the PAT growth to 7% to Rs 1015.88 crore. The net profit settled with 7% growth to Rs 996.68 crore on considering minority interest and share of associate's profit.

The above consolidated results for Dec 2011 quarter also include the financial results of Jindal Power, a subsidiary of JSPL. The net sales of Jindal Power was flat at Rs 799.64 crore (compared to Rs 796.56 crore in Dec 2010 quarter) while net profit fell by 1% to Rs 481.14 crore. It generated power of 2255 million units with PLF of 102% in Dec 2011 quarter against 2238 million units in Dec 2010 quarter.

On standalone basis, the company's topline grew by robust 37% to Rs 3298.32 crore while the net profit fell by 8% to Rs 461.07 crore in Dec 2011 quarter.

In nine month ended Dec 2011, the consolidated topline grew by healthy 37% to Rs 12724.99 crore aided by robust steel & iron sales though partially limited by poor power sales. The iron & steel sales grew by notable 54% to Rs 10095.76 crore while the power sales fell by 2% to Rs 3183.99 crore. Spike in raw material costs due to increased imports of sponge iron from Oman plant, increase in steel costs and inability to pass on the same led to whopping 1050 bps crash in OPM to 39.9%. Thus the operating profit growth was drastically constrained to 9% to Rs 5071.63 crore. Higher non operating expenses and incurring EO expense (of Rs 48.23 crore) constrained the PBT growth to 4% to Rs 3751.93 crore. Spike in effective tax rate led to flat 1% growth in consolidated net profit to Rs 2790.85 crore.

The net sales of Jindal Power, which is included above, fell by 12% to Rs 2206 crore while the net profit reduced by 11% to Rs 1344 crore in nine month ended Dec 2011. It generated power of 6464 million units, up by 1%.

On standalone basis, the topline grew by 34% to Rs 9158.66 crore though net profit fell by 6% to Rs 1327.02 crore on EO expense incurred (against none in nine month ended Dec 2010) and increased tax rate.

Expansion of JPL

JPL has announced further brownfield expansion of 2400 MW (4x600 MW) Power Plant at an estimated project cost of Rs 13410 crore (US $ 3.01 billion*). Order for Boiler Turbine & Generator (BTG) package has been placed on BHEL in December 2008.

This project will be completed in stages in the year of 2013/14 and the same has been funded on the basis of 75:25 debt: equity. Loan documents for Rs. 10,057 crore of debt has been executed on 26th March, 2010 and the equity of Rs 3,353 crore will be arranged from internal accruals/ IPO.

JPL has announced expansion at Dumka, Jharkhand 1320 MW (2X660 MW) Power Plant at an estimated project cost of Rs 7224 crore (US $ 1.62 billion*). This Plant will be completed in stages in the year of 2015 and the same has been funded on the basis of 70:30 debt: equity. The company is in the process of tie-up of debt amounting to Rs 5057 crore and the equity of Rs. 2167 crore will be arranged from internal accruals/ IPO.

Another Power Plant of 660 MW (1X660 MW) at Godda, Jharkhand at an estimated project cost of Rs 3666 crore (US $ 0.82 billion*) will be completed in the year of 2015 and the same has also been funded on the basis of 70:30 debt : equity. The company is in the process of tie-up of debt amounting to Rs 2566 crore and the equity of Rs 1100 crore will be arranged from internal accruals/ IPO.

JSPL has commissioned 2 units of 135 MW (1 unit at Dongamahua in Raigarh, Chhattisgarh and 1 unit at Angul in Odisha) on 18^th January 2012. With this total 6 units have been commissioned in series of total 10 units of 135 MW. 

• The promoters' share in the total shareholding stands at 58.58% as on 31^st Dec 2011. The promoters' have pledged 6000 shares of the company.

• Currently the scrip is trading at Rs 517.50 on BSE.

Jindal Steel & Power: Consolidated Results

Jindal Steel & Power: Consolidated Segment Results