Mumbai, India: JSW Steel Limited (“JSW Steel” or the “Company”) today reported its results for the Third Quarter ended 31st Dec, 2021 (“Q3 FY2022” or the “Quarter”).
Key Highlights for Q3 FY2022:
Crude Steel production: 4.41 million tonnes
Saleable Steel sales: 4.00 million tonnes
Revenue from Operations: ₹28,850 crores
Quarterly Operating EBITDA: ₹6,797 crores
Quarterly Net Profit after Tax: ₹3,424 crores
Crude Steel production: 5.21 million tonnes
Saleable Steel sales: 4.63 million tonnes
Revenue from Operations: ₹38,071 crores
Quarterly Operating EBITDA: ₹9,132 crores
Quarterly Net Profit after Tax: ₹4,516 crores
Net Debt to Equity : 1.02x and Net Debt to EBITDA : 1.73x
The Indian economy had a steady recovery following the second wave of Covid-19 in Q1 FY2022, and India’s vaccination drive progressed steadily, with 1 billion shots administered by October 2021, and 1.5 billion shots by January 2022. Several high-frequency economic indicators were near or above pre-Covid levels by Q3 FY2022. The ongoing third wave of Covid-19 in India has so far been less severe than the prior waves. While contact-intensive services are temporarily impacted, industrial activity remains robust supported by government spending and healthy global demand, and the economy is expected to bounce back once cases begin to trail off.
During the Quarter, JSW Steel reported Crude Steel Production of 4.41 million tonnes, an increase of 8% QoQ, led by an increase in average capacity utilization to 94% from the existing operations, and production of 0.18 million tonnes from the recently commissioned Dolvi Phase-2 expansion.
Sales of Saleable Steel for the quarter was 4.00 million tonnes, higher by 6% QoQ, led by a 29% increase in domestic sales, driven by demand from Automotive, Solar and Appliance sectors. Exports were moderated to 15% of sales during the Quarter vs. 30% of sales in Q2 FY2022.
Revenue from Operations was at ₹28,850 crores, an increase of 3% QoQ, led by an increase in volumes and net sales realization in the domestic market.
The Company achieved quarterly Operating EBITDA at ₹6,797 crores, lower by 22% QoQ, with an EBITDA margin of 23.6%. The EBITDA margin was lower QoQ primarily due to elevated prices of coking coal and higher power cost. Domestic Iron ore prices during the Quarter softened in line with global indices, partly offsetting the cost increase.
The Indian Bureau of Mines (IBM) has carried out upward revision of already published average selling price of iron ore for the month of September and October 2021. Based on a legal opinion obtained, the Company believes that the methodology used by IBM for arriving at such revised average selling price by excluding certain bona fide sale transactions of iron ore by the Company is not in accordance with the provisions of the Mineral Conservation and Development Rules, 2017. Accordingly, the Company has contested the same before the Honourable High Court of Odisha and the matter is sub judice. However, the Company, as a matter of prudence, has recognised the provision towards Mining Premium and Royalties payable based on such revised average selling prices published by IBM, and the impact on profit and loss for the quarter ended 31 December 2021 is ₹1,056 crores.
The Company reported quarterly Profit after Tax of ₹3,424 crores, lower by 36% QoQ mainly due to lower EBITDA margin, higher interest and depreciation on completion and capitalization of projects and onetime gain of ₹702 crores accounted in Q2 FY2022 on fair valuation of Optionally Fully Convertible Debentures held at Piombino Steel Ltd., and higher tax rate.
Bhushan Power & Steel Ltd (BPSL):
BPSL became a subsidiary with effect from 1st October 2021, as JSW Steel increased its stake in BPSL to 83.28% from 49% earlier on conversion of OFCD’s. During the quarter, BPSL registered Crude Steel Production of 0.64 million tonnes and Sales volume of 0.58 million tonnes. Exports accounted for 36% of the sales mix. Revenue from Operations and Operating EBITDA for the quarter stood at ₹5,083 crores and ₹1,547 crores, respectively. It reported a Profit after Tax of ₹1,018 crores for the quarter.