Jindal Steel and Power

Captital Market | Mumbai |

Net profit impacted by increase in depreciation and financing costs and restructuring costs of WCL, Australia

Jindal Steel and Power reported 10% increase in consolidated income from operations to Rs 4978.38 crore in Q1FY'15 compared to Q1FY'14 as Iron and steel revenues rose by 12% to Rs 4024.62 crore and power sales were up by 19% to Rs 1290.66 crore. The sales of others were down 53% to Rs 111 crore. The OPM increased 300 bps to 32.7%. Thus the operating profit rose by 25% to Rs 1628.98 crore. 25% growth in operating profit was achieved inspite of disruption to iron ore supply and continued shortage of coal to the newly commissioned JPL's Tamnar Phase II power plant.

Other income rose 70% to Rs 90.41 crore compared to Rs 53.28 crore in the corresponding previous year quarter while interest cost doubled to Rs 535.45 crore. Depreciation increased 58% to Rs 667.12 crore. PBT fell 23% to Rs 516.82 crore. Effective rate of tax fell to 22.3% compared to 25.1% in the corresponding previous year period resulting 20% fall in PAT to Rs 401.58 crore. Considering minority interest and share of associate's net profit fell 15% during the quarter to Rs 418.13 crore.

15% fall in net profit was mainly due to increase in depreciation and financing costs and restructuring costs of WCL, Australia.

Segment wise Consolidated PBIT margin of Iron and steel segment increased by 80 bps to 19.1% while PBIT margin of power segment fell by 340 bps to 45%.

JSPL's new pellet plant with a capacity of 4.5 MTPA went into operation during Q1FY15; however the production had to be curtailed due to restricted availability of iron ore fines. Both Blast Furnaces and two EAFs were upgraded. With these, the modernisation of Iron & Steel shops at Raigarh was completed and the plant's capacity has been enhanced to 3.5 MTPA as against 3.0 MTPA earlier. JSPL's Net Sales Realization increased by 8% in Q1FY15 compared to same quarter last year. The company continued its relentless effort to reduce its working capital, which resulted in its Finished Good inventory reduce by 27% to an all-time low of 207,731MT.

JSPL's retail sales grew by an impressive 26% during Q1FY15 compared to Q4FY14 and by 284% compared to Q1FY14. With this, the company consolidated its presence in retail market on a country wide basis. Although Rupee's strengthening against US$ adversely affected the price competitiveness, JSPL increased their exports by 6% in volume terms during Q1FY15. Company successfully entered the High Grade plate and structural steel market of US, Canada and Mexico.

JPL successfully completed 3 out of the 4, 600 MW Power Units of JPL under Tamnar Phase II but only one unit was operated during the quarter. With improved availability of coal and transmission capacity, the company is hopeful to operate other units. JPL's Phase - I, 1000 MW plant was operated at 97.8% PLF. The average Net Sales Realization for Q1FY15 of JPL was at Rs. 3.29 compared to Rs. 3.21 in Q1FY14.

JSPL's 4x135 MW captive power plant at Dongamuha, achieved substantial improvement in its availability and PLF, as a result of which it posted impressive increase in its profitability. Although, all 6 x 135 MW units of Angul Power plant have been commissioned, the utilization remained low due to restrictions on export of power.

JSPL Global Venture's SMS plant in Oman was successfully completed in April, 2014 and the billet deliveries to the market started from May 2014. The plant's PBT in Q1FY15 increased by 180 % compared to Q1FY14. However, Company's WCL Australia's coking coal mines continued to make losses due to operational reasons and restructuring costs. A major restructuring of WCL was undertaken under which the manpower has been reduced by 38% compared to Q4FY 14.

Consolidated Quarterly Performance

The consolidated income from operations increased 10% to Rs 4978.38 crore in Q1FY'15 compared to Q1FY'14 as Iron and steel revenues rose by 12% to Rs 4024.62 crore and Power sales were up by 19% to Rs 1290.66 crore. The sales of others were down 53% to Rs 111 crore. The OPM increased 300 bps to 32.7% as other expenses as a percentage of adjusted net sales fell 190 bps to 15%, cost of material consumed fell 310 bps to 28.2%, stores and spares consumed fell 100 bps to 9.2% limited by 20 bps rise in purchase of stock in trade to 0.9%, 110 bps increase in employee benefit expense to 5% and 110 bps increase in power and fuel expenses to 9.7%.

Thus the operating profit rose by 25% to Rs 1628.98 crore. Other income rose 70% to Rs 90.41 crore compared to Rs 53.28 crore in the corresponding previous year quarter while interest cost doubled to Rs 535.45 crore. Depreciation increased 58% to Rs 667.12 crore. PBT fell 23% to Rs 516.82 crore. Effective rate of tax fell to 22.3% compared to 25.1% in the corresponding previous year period resulting 20% fall in PAT to Rs 401.58 crore. Considering minority interest and share of associate's net profit fell 15% during the quarter to Rs 418.13 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 283.6

Jindal Steel and Power: Consolidated Results

Particulars 1406 (3) 1306 (3) Var (%) 1403 (12) 1303 (12) Var (%)
Income from Operations 4978.38 4540.27 10 20004.04 19806.78 1
OPM(%) 32.7 28.7 33.7 38.4
OP 1628.98 1305.14 25 5776.4 6668.65 -13
OI 90.41 53.28 70 65.63 136.42 -52
PBIDT 1719.39 1358.42 27 5842.03 6805.07 -14
Interest 535.45 267.53 100 1500.82 858.28 75
PBDT 1183.94 1090.89 9 4341.21 5946.79 -27
Depreciation 667.12 421.6 58 1829.2 1539.22 19
PBT before EO 516.82 669.29 -23 2512.01 4407.57 -43
EO 0 0 0 574.12
PBT after EO 516.82 669.29 -23 2512.01 3833.45 -34
Tax 115.24 168.02 -31 618.21 921.83 -33
PAT 401.58 501.27 -20 1893.80 2911.62 -35
Minority Interest 13.29 -13.60 -198 14.01 -41.71
Share of Profit/Loss of Associates excluding EO 3.26 6.62 -51 2.55 40.2 -94
Net profit 418.13 494.29 -15 1910.36 2910.11 -34
EPS(Rs)* 18.3 21.6 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: Consolidated Segment wise Results

Particulars 1406 (3) 1306 (3) % of total Var (%) 1403 (12) 1303 (12) % of total Var (%)
Revenue:
Iron and Steel 4024.62 3606.74 74 12 16439.98 16329.76 76 1
Power 1290.66 1086.38 24 19 4381.68 4559.96 20 -4
Others 111.00 234.39 2 -53 838.77 534.3 4 57
Total 5426.28 4927.51 100 10 21660.43 21424.02 100 1
Less: Inter Segment Revenues 447.90 387.24 16 1656.39 1617.24 2
Net Revenue from operation 4978.38 4540.27 10 20004.04 19806.78 1
PBIT:
Iron and Steel 767.16 660.10 69 16 3328.77 3915.44 133 -15
Power 580.47 525.55 52 10 2024.23 2378.86 81 -15
Others -229.23 -25.11 -20 813 -148.84 -6.71 -6 2118
Total 1118.40 1160.54 100 -4 5204.16 6287.59 207 -17
Less: Interest 535.45 267.53 100 1500.82 858.28 75
Less: Unallocable exp/Income 66.13 223.73 1191.33 1021.74
EO 0 574.12
Net Profit/Loss Before Tax 516.82 669.28 -23 2512.01 3833.45 -34
Capital Employed:
Iron and Steel 21,749.49 15718.77 94 38 21,166.68 14955.84 94 42
Power 14,861.63 8595.64 65 73 15,123.03 8474.22 67 78
Others 6,136.60 2179.31 27 182 6,209.72 2118.58 27 193
Unallocated -19,717.69 -4746.03 315 -19,888.89 0.00
Total Capital Employed 23030.03 21747.69 100 6 22610.54 25548.64 100 -12
Figures in Rs crore
Var (%) exceeding 999 has been truncated to 999
Source: Capitaline Corporate Database

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