Jindal Steel & Power

Captital Market | Mumbai |

EO expense impacted performance

JSPL's consolidated performance during Q3FY15 was negatively impacted due to a combination of several adverse developments which interalia include imposition of additional levy on the coal extracted since the start of mining operation in its captive mines; low demand for steel in the domestic as well as export markets and the consequent decline in market price levels; continued suspension of iron ore supplies from its major supplier, M/s SMPL and non - availability of coal for its Tamnar Phase - II 4 x 600 MW Power plants.

While JSPL managed to achieve an EBITDA level of 28% at consolidated level, its Profit before tax was adversely affected due to unfavourable market conditions and high cost of raw materials. The results were also affected by substantially higher costs on account of depreciation and interest which for the consolidated operations during Q3FY15 increased by Rs.528 crore compared to the same quarter in the previous year. The Q3FY15 PAT excluding exceptional item were Rs.180 crore. As a result of Supreme Court's decision to impose additional levy retrospectively, JSPL was forced to pay a lumpsum amount of Rs. 3089 crore which caused it to post a loss of Rs.1675 crore.

Segment wise Consolidated PBIT margin of Iron and steel segment decreased by 630 bps to 13.9% while PBIT margin of power segment rose by 30 bps to 51.2%.

Although JSPL successfully commissioned its 2.3 MTPA billet caster and 0.175 MTPA Heat treatment shop in Angul during Q3FY'15, its plant capacity could not be fully utilized due to subdued demand for plates and semi - finished products during the last quarter. All recently commissioned and upgraded units delivered stable and targeted performance levels. However, the Company had to meet a substantial part of its requirements of iron ore and thermal coal either from auction sales or imports resulting in higher raw material and production costs. The company during Q3 undertook multiple steps to reduce its costs including reduction of manpower by over 5%.

Jindal Power (JPL)'s existing 4x250 MW plant continued to operate at PLF of 96%, the Phase II units could not be operated due to shortage of coal and relatively low merchant rates. COD Certification for three (3) out of the four units have been completed and the units have achieved stable performance at the rated capacity levels. The company secured two new long term PPAs from KSEB with a combined capacity of 350 MW.

JSPL's Oman unit notwithstanding the tough market conditions, operated to near full capacity, its units in Australia and South Africa suffered setback in performance due to issues of Environmental Clearance and labour productivity. Both these issues are in advance stage of resolution and are expected to resume normal production during 4QFY15.

Consolidated Quarterly Performance

The consolidated income from operations decreased 2% to Rs 5044.66 crore in Q3FY'15 compared to Q3FY'14 as Iron and steel revenues fell by 6% to Rs 4015.89 crore and Power sales were up by 47% to Rs 1546.8 crore. The sales of others were down 79% to Rs 50.46 crore. The OPM decreased 480 bps to 28.2% as power and fuel expenses as a percentage of adjusted net sales rose 250 bps to 11.7% along with employee benefit expenses up by 90 bps to 4.9% and purchase of stock in trade up by 20 bps to 0.17% limited by 40 bps decrease in cost of material consumed to 30% and 130 bps decrease in stores and spares consumed to 8.9% and 160 bps fall in other expenses to 16.5%.

Thus the operating profit fell by 16% to Rs 1424.83 crore. Other income was Rs 34.27 crore compared to Rs 7.81 crore in the corresponding previous year quarter while interest cost rose 63% to Rs 702.4 crore. Depreciation increased 55% to Rs 714.68 crore. PBT before EO fell 95% to Rs 42.02 crore.

The company reported an EO expense of Rs 1855.15 crore in Q3FY'15 compared to nil in the corresponding previous year period. The Hon'ble Supreme court of India had cancelled number of coal blocks allocated to various entities which include nine coal blocks of the company by its order dated 24 September 2014 and directed to pay an additional levy of Rs 295 per MT on gross coal extracted from the operational mines from 1993 to till date. The company has paid such levy on coal extracted during the period from 1993 to 24 Sep 2014 of Rs 3089.22 crores. Management based on legal opinion has accounted for Rs 1793.63 crore computed on net extraction of coal as exceptional item during the quarter. Balance amount of Rs 1295.59 crore has been shown as recoverable from the government authority since the entire amount of additional levy has been paid under protest. The company has also provided Rs 61.52 crore as levy against coal extracted from 25 th September 2014 till 31st December 2014.

PBT after EO reported was loss of Rs 1813.13 crore compared to profit of Rs 818.96 crore. Considering tax writeback, minority interest and share of profit/loss of associates' net loss of the company was Rs 1618.78 crore compared to profit of Rs 561.51 crore.

Consolidated Nine months ended Performance

The consolidated income from operations increased 3% to Rs 14875.08 crore. The OPM increased 50 bps to 31.6% resulting into 5% increase in operating profit to Rs 4693.85 crore. Other income rose 259% to Rs 164.77 crore while interest cost rose 70% to Rs 1836.49 crore. Depreciation increased 54% to Rs 2032.12 crore. PBT before EO fell 53% to Rs 990.01 crore. The company reported an EO expense of Rs 1855.15 crore in 9MFY'15 compared to nil in the corresponding previous year period. PBT after EO was loss of Rs 865.14 crore. Considering tax writeback, minority interest and share of profit/loss of associates' net loss of the company was Rs 758.82 crore compared to profit of Rs 1507.86 crore. 

The scrip is currently trading at Rs 153

Jindal Steel and Power: Consolidated Results

Particulars 1412 (3) 1312 (3) Var (%) 1412 (9) 1312 (9) Var (%) 1403 (12) 1303 (12) Var (%)
Income from Operations 5044.66 5142.12 -2 14875.08 14387.83 3 20004.04 19806.78 1
OPM(%) 28.2 33.1 31.6 31.0 33.7 38.4
OP 1424.83 1700.69 -16 4693.85 4462.66 5 5776.4 6668.65 -13
OI 34.27 7.81 339 164.77 45.96 259 65.63 136.42 -52
PBIDT 1459.1 1708.5 -15 4858.62 4508.62 8 5842.03 6805.07 -14
Interest 702.4 429.65 63 1836.49 1077.65 70 1500.82 858.28 75
PBDT 756.7 1278.85 -41 3022.13 3430.97 -12 4341.21 5946.79 -27
Depreciation 714.68 459.89 55 2032.12 1315.33 54 1829.2 1539.22 19
PBT before EO 42.02 818.96 -95 990.01 2115.64 -53 2512.01 4407.57 -43
EO 1855.15 0 1855.15 0 0 574.12
PBT after EO -1813.13 818.96 PL -865.14 2115.64 -141 2512.01 3833.45 -34
Tax -138.02 259.75 LP 8.28 600.23 -99 618.21 921.83 -33
PAT -1675.11 559.21 PL -873.42 1515.41 -158 1893.80 2911.62 -35
Minority Interest 60.30 12.71 116.37 -10.05 14.01 -41.71
Share of Profit/Loss of Associates excluding EO -3.97 -10.41 -1.77 2.50 2.55 40.2 -94
Net profit -1618.78 561.51 PL -758.82 1507.86 -150 1910.36 2910.11 -34
EPS(Rs)* 24.5 22.0 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 1412 (3) 1312 (3) % of total Var (%) 1412 (9) 1312 (9) % of total Var (%) 1403 (12) 1303 (12) % of total Var (%)
Revenue:
Iron and Steel 4015.89 4282.66 72 -6 11847.37 11790.42 72 0 16439.98 16329.76 76 1
Power 1546.80 1055.28 28 47 4296.95 3195.53 26 34 4381.68 4559.96 20 -4
Others 50.46 244.09 1 -79 237.64 630.31 1 -62 838.77 534.3 4 57
Total 5613.15 5582.03 100 1 16381.96 15616.26 100 5 21660.43 21424.02 100 1
Less: Inter Segment Revenues 568.49 439.91 29 1506.88 1228.43 23 1656.39 1617.24 2
Net Revenue from operation 5044.66 5142.12 -2 14875.08 14387.83 3 20004.04 19806.78 1
PBIT:
Iron and Steel 557.68 866.56 51 -36 2000.57 2,401.73 58 -17 3328.77 3915.44 133 -15
Power 791.87 536.99 73 47 2208.32 1573.21 64 40 2024.23 2378.86 81 -15
Others -262.33 -86.57 -24 203 -758.34 -194.58 -22 290 -148.84 -6.71 -6 2118
Total 1087.22 1316.98 100 -17 3450.55 3780.36 100 -9 5204.16 6287.59 207 -17
Less: Interest 702.4 429.65 63 1836.49 1077.65 70 1500.82 858.28 75
Less: unallocable exp/Income 342.8 68.37 624.05 587.07 1191.33 1021.74
EO 1855.15 1855.15 0 574.12
Net Profit/Loss Before Tax -1813.13 818.96 -321 -865.14 2115.64 -141 2512.01 3833.45 -34
Capital Employed:
Iron and Steel 32,598.94 16588.40 150 97 32,598.94 16588.40 150 97 21,166.68 14955.84 94 42
Power 14,871.35 8089.98 69 84 14,871.35 8089.98 69 84 15,123.03 8474.22 67 78
Others 6,195.42 6130.37 29 1 6,195.42 6130.37 29 1 6,209.72 2118.58 27 193
Unallocated -31,974.13 -7923.07 304 -31,974.13 -7923.07 304 -19,888.89 0.00
Total Capital Employed 21691.58 22885.68 100 -5 21691.58 22885.68 100 -5 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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