Jindal Steel and Power

Captital Market | Mumbai |

Lower than expected performance

Jindal Steel and Power reported 10% fall in consolidated income from operations to Rs 5102.56 crore in Q4FY'14 compared to Q4FY'13 as Iron and steel revenues fell by 11% to Rs 4317.28 crore and Power sales were down by 4% to Rs 1084.4 crore. The sales of others were marginally up 2% to Rs 128.24 crore.

The OPM decreased 240 bps to 25.7%. Thus the operating profit fell by 17% to Rs 1314.74 crore. Other income fell 32% to Rs 19.67 crore compared to Rs 29.08 crore in the corresponding previous year quarter while interest cost was up 77% to Rs 423.27 crore. Depreciation increased 17% to Rs 513.87 crore. PBT fell 58% to Rs 396.27 crore. Effective rate of tax fell to 4.5% compared to 20% in the corresponding previous year period resulting 50% fall in PAT to Rs 378.29 crore. Considering minority interest and share of associate's net profit fell 47% during the quarter to Rs 402.2 crore. Results reported by the company were lower than the estimates.

Segment wise Consolidated PBIT margin of Iron and steel segment increased by 500 bps to 21.4% thereby its PBIT fell 16% to Rs 922.48 crore. However PBIT margin of power segment fell by 950 bps to 39.4%, thus its PBIT decreased by 23% to Rs 427.47 crore.

During this quarter the company successful completed its Angul Phase - I steel project and three (3) units of 600 MW each in Tamnar (JPL). In addition to the above plants, company's 2 MTPA Steel Plant in Oman has been completed in Q4 FY'14 and successfully commenced its commercial production in April 2014. The plant, Oman's first & largest and Middle East's third largest plant was put into use in just 23 months. The company's second 4.5 MTPA pallet plant also completed and with that the total pellet production capacity rose to 9.0 MTPA.

In parallel with the execution of new projects, the company also undertook overhaul and up gradation of its existing 3 MTPA plant in Raigarh, which included inter alia, modernization of its both Blast Furnaces, EAFs, Plate Mill and Slab Caster. The upgradation which started from January, 2014 is expected to be completed by June ,2014. While the upgradation and modernization would enhance the productivity of the Raigarh unit substantially, in the short term covering Q4FY14 and Q1FY'15 output from this plant has been affected. This consequently had impact on the physical output and financial performance of the company during Q4FY14.

As a result, JSPL's Standalone turnover during Q4FY14 was 13% less than Q4FY'13. The PAT dropped by 10% compared to Q4'FY13. PBT and PAT were adversely impacted due to additional load of Rs. 260 crores from the combined impact of depreciation and interest during Q4FY14. For the year FY'14, the interest and depreciation aggregated to Rs. 3330 crore compared to Rs 2397 crore in FY'13 on consolidated basis.

The retail business during FY14 grew by 333% compared to FY13. Exports during FY14 rose by 160% compared to previous year. Company's relentless efforts to reach out premium market segments and market special grade of steel resulted in significant increase of its Net sales realization (NSR) which in Q4 increased by 9% compared to Q4FY13. JSPL's continued focus on Finished Goods inventory management saw it drop from 426,183 MTPA in April 2013 to 327,056 MTPA in March 31, 2013. (23 drop).

Due to severe constrains in power evacuation, the revenue and PAT of Jindal Power (JSPL subsidiary) during Q4FY14 dropped by 23%. In Angul, balance two (2) power units of 135 MW each were successfully commissioned and synchronized during Q4FY14.

While annual revenue of JSPL's global ventures increased by 25%, the dropping of coking coal prices and acquisition of Wollongong (formerly Gurajat NRE) in Australia adversely impacted the PAT. JSPL Oman HBI plant increased its annual revenue by 10%. The recently commissioned SMS in Oman and augmented mining operations are set to see a quantum jump in earnings of global ventures during FY15

Consolidated Quarterly Performance

The consolidated income from operations decreased 10% to Rs 5102.56 crore in Q4FY'14 compared to Q4FY'13 as Iron and steel revenues fell by 11% to Rs 4317.28 crore and Power sales were down by 4% to Rs 1084.4 crore. The sales of others were marginally up 2% to Rs 128.24 crore. The OPM decreased 240 bps to 25.7% as other expenses as a percentage of adjusted net sales rose 570 bps to 21.5%, power and fuel expenses rose 150 bps to 8.8%, employee benefit expenses rose 110 bps to 4.4% and stores and spares consumed rose 140 bps to 9.5% limited by fall in cost of material consumed by 540 bps to 29.8% and 30 bps fall in purchase of stock in trade to 0.15%..

Thus the operating profit fell by 17% to Rs 1314.74 crore. Other income fell 32% to Rs 19.67 crore compared to Rs 29.08 crore in the corresponding previous year quarter while interest cost was up 77% to Rs 423.27 crore. Depreciation increased 17% to Rs 513.87 crore. PBT fell 58% to Rs 396.27 crore. Effective rate of tax fell to 4.5% compared to 20% in the corresponding previous year period resulting 50% fall in PAT to Rs 378.29 crore. Considering minority interest and share of associate's net profit fell 47% during the quarter to Rs 402.2 crore.

Consolidated Year ended Performance

The consolidated income from operations increased 1% to Rs 20004.04 crore. The OPM decreased 470 bps to 33.7% resulting into 13% decrease in operating profit to Rs 5776.4 crore. Other income fell 52% to Rs 65.63 crore while interest cost was up 75% to Rs 1500.82 crore. Depreciation increased 19% to Rs 1829.2 crore. PBT before EO fell 43% to Rs 2512.01 crore. The company had an nil EO expense in FY'14 compared to EO expense of Rs 574.12 crore in FY'13 related to provision set aside for the investments made in Bolivia by the company that has been impaired. The company had made strategic business investment in Bolivia through its subsidiaries in Bolivia. On account of non fulfillment of contractual obligations by the Government of Bolivia, Jindal Steel Bolivia SA terminated the El Mutan Joint Venture contract with the Government of Bolivia. Therefore, the investment made by company in El Mutan Joint Venture Project & other Operations have been impaired.

PBT after EO fell 34%. Effective rate of tax rose 60 bps to 24.6% resulting 35% fall in PAT to Rs 1893.8 crore. Considering minority interest and share of associate's net profit fell 34% during the year to Rs 1910.36 crore.

The scrip is currently trading at Rs 255.5

Jindal Steel and Power: Consolidated Results

Particulars 1403 (3) 1303 (3) Var (%) 1403 (12) 1303 (12) Var (%)
Income from Operations 5102.56 5648.44 -10 20004.04 19806.78 1
OPM(%) 25.7 28.1 33.7 38.4
OP 1313.74 1589.32 -17 5776.4 6668.65 -13
OI 19.67 29.08 -32 65.63 136.42 -52
PBIDT 1333.41 1618.4 -18 5842.03 6805.07 -14
Interest 423.27 238.73 77 1500.82 858.28 75
PBDT 910.14 1379.67 -34 4341.21 5946.79 -27
Depreciation 513.87 438.3 17 1829.2 1539.22 19
PBT before EO 396.27 941.37 -58 2512.01 4407.57 -43
EO 0 0 0 574.12
PBT after EO 396.27 941.37 -58 2512.01 3833.45 -34
Tax 17.98 188.62 -90 618.21 921.83 -33
PAT 378.29 752.75 -50 1893.80 2911.62 -35
Minority Interest 24.06 -8.32 -389 14.01 -41.71
Share of Profit/Loss of Associates excluding EO 0.05 15.80 -100 2.55 40.2 -94
Net profit 402.40 760.23 -47 1910.36 2910.11 -34
EPS(Rs)* 17.6 33.2 20.9 36.6
* Annualized on current equity of Rs 91.49 crore; Face Value of Rs 1
Figures in Rs crore
Var (%) exceeding 999 has been truncated to 999
LP : Loss to profit; PL : Profit to loss
EO: Extraordinary item
EPS is calculated after excluding EO and relevant tax
Source : Capitaline Corporate Database

Jindal Steel_Power: Segment wise Results

Particulars 1403 (3) 1303 (3) % of total Var (%) 1403 (12) 1303 (12) % of total Var (%)
Revenue:
Iron and Steel 4317.28 4840.63 78 -11 16439.98 16329.76 76 1
Power 1084.40 1130.06 20 -4 4381.68 4559.96 20 -4
Others 128.84 126.67 2 2 838.77 534.3 4 57
Total 5530.52 6097.36 100 -9 21660.43 21424.02 100 1
Less: Inter Segment Revenues 427.96 448.92 -5 1656.39 1617.24 2
Net Revenue from operation 5102.56 5648.44 -10 20004.04 19806.78 1
PBIT:
Iron and Steel 922.48 794.46 79 16 3328.77 3915.44 133 -15
Power 427.47 552.68 36 -23 2024.23 2378.86 81 -15
Others -175.33 -23.28 -15 653 -148.84 -6.71 -6 2118
Total 1174.62 1323.86 100 -11 5204.16 6287.59 207 -17
Less: Interest 423.17 238.73 77 1500.82 858.28 75
Less: Unallocable exp/Income 355.08 143.76 1191.33 1021.74
EO 0 574.12
Net Profit/Loss Before Tax 396.37 941.37 -58 2512.01 3833.45 -34
Capital Employed:
Iron and Steel 21,166.68 14955.84 50 42 21,166.68 14955.84 50 42
Power 15,123.03 8474.22 36 78 15,123.03 8474.22 36 78
Others 6,209.72 2118.58 15 193 6,209.72 2118.58 15 193
Total Capital Employed 42499.43 25548.64 100 66 42499.43 25548.64 100 66
Figures in Rs crore
Var (%) exceeding 999 has been truncated to 999
Source: Capitaline Corporate Database

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