Mr Sajjan Jindal Tells a Tale of Two Contrasting Halves in FY'21
Sajjan JindalBloomberg

Mr Sajjan Jindal Tells a Tale of Two Contrasting Halves in FY'21

JSW Steel CMD Mr Sajjan Jindal in the Annual Report summarized the state of Indian steel sector & JSW Steel’s journey in 2020-21. He said “Across

JSW Steel CMD Mr Sajjan Jindal in the Annual Report summarized the state of Indian steel sector & JSW Steel’s journey in 2020-21. He said “Across economies, commodities and specifically steel, FY 2020-21 was a year of two contrasting halves, the first witnessed a massive downturn and the second witnessed an equally resilient upturn and recovery. Governments and central banks worked in tandem to cushion and stabilise this volatility, while policies were designed to facilitate growth.of intelligent measures that focused on capacity building and being future-ready. This was done even as severe restrictions were enforced on human mobility and economic activity during the extended national and state lockdowns. Consequently, India's annual GDP performance was better than expected, and the coming years appear promising, even after accounting for the disruptions caused by the second wave of the pandemic.”

He said “The global steel industry proved its resilience and witnessed a strong surge of demand in the second half of the year. We believe that the industry is built on robust fundamentals, and, as a result, prices have strengthened significantly from the average of the previous year. Steel continues to hold its position as the most affordable, universally consumed and versatile material that is deployed in solving many of the world's present-day challenges.”

He said “Indian Steel producers also witnessed gradually improving utilisation levels and increased exports during the year, underscoring our competitiveness as an industry. Domestic demand also rebounded, with the second half of the year seeing a return of monthly dispatches to pre-COVID levels. We expect that increased infrastructure spending, rising demand from automotive and construction, together with a revival of private capex and consumer demand will continue to drive steel consumption.”

He highlighted “Despite the prevailing uncertainty, our team rallied to deliver a strong operational performance, a testament to our well-defined strategic framework in place alongside superior execution capabilities. Commencing production at our iron ore mines in Odisha enabled a steady stream of quality ore, ensuring production continuity and allowing us to sweat our assets. Our acquisition of iron ore mines through auctions has proved to be a game-changer. The ability to focus on inorganic expansion saw us make four key acquisitions in the year Bhushan Power a Steel, Vallabh Tinplate, PCMD Division of Welspun Corp. and Asian Colour Coated. These acquisitions enhance our capacity and strengthen our downstream capabilities and product mix.”

Mr Jindal added “We also demonstrated agility by switching rapidly between exports and domestic sales, in line with the shifting demand patterns. Moreover, we set our overseas operations on a turnaround path and expect improved performance from them in FY 2021-22. Lastly, our share of value-added products accounted for 52% of sales, and nearly half of all sales to the retail segment comprised branded products. Better average realisations, cost optimisation and efficiencies meant that we were able to grow topline by 9%, and saw our operating EBITDA increase to INR 20,141 crore, a 70% rise from previous year's figure of INR 11,873 crore, despite higher iron ore and energy prices.”

He also said “Over the past three years, we have deployed over INR 48,000 crore of capex to increase our production capacity by 50% (through organic and inorganic routes) without increasing debt. Together with our JVs, and the 5 MTPA expansion at Dolvi that will be commissioned in the next few months, JSW Steel will have -28 MTPA of steel-making capacity, including the 1.5 MTPA capacity in USA. These investments, efficiently executed, have given us higher productivity, superior cost profile, and wider portfolio of lucrative value-added products - to serve a growing domestic and global market. We are now embarking on the next phase of growth with the newly approved capex plan of INR 25,115 crore. This capital will allow us to augment our crude steel capacity at Vijayanagar by 7.5 MTPA, enhance and digitise our mining capabilities and infrastructure in Odisha and help us set up a state-of-the-art colour-coated facility in Jammu S Kashmir to support local demand and development in the state. In addition, we are focusing on upgrading our acquired facilities through efficiency enhancing projects.”

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