Jindal Stainless, India’s largest producer of stainless steel and part of the OP Jindal group, reported a strong recovery in its operating and financial performance during the fourth and final quarter of the financial year.
For the three months ended March, the company’s sales volumes jumped 15% compared to the same period of last year to 2.55 lakh tonne.
Revenue rose faster, aided by higher prices, to Rs 3,914 cr, up 26% on year.
As a result, the company swung to a fourth-quarter net profit of Rs 293 cr from a Q4 loss of Rs 66 cr last year.
“The fourth-quarter demand was buoyed by segments like Auto, and a healthy revival in demand from the Pipe & Tube segment, along with Railways & allied infrastructure, including the Metro segment,” Jindal Stainless said.
“The demand for special grades in Q4FY21 registered growth due to localization efforts by the government and Company’s initiatives for innovation.”
Despite the second wave disrupting the market, the company said it expects the upward trajectory to be maintained.
“With further push on indigenous production and expected economic recovery, healthy demand is likely to be generated in the future as well. Demand from segments like Elevators and Lifts, and Hollowware also remained strong and is likely to continue,” it said.
Nevertheless, overall production and revenue for the full year was less than what was seen in FY20.
Full year revenue fell 6% to Rs 12,188 cr from Rs 12,951 cr, even though net profit was higher at Rs 419 cr versus Rs 73 cr in the preceding year.
It pointed out that global production of stainless steel was impacted the pandemic in the year 2020, and stood at 50.90 million tonne, lower by 2.5% over 2019.
The impact was higher in India as stainless steel melt production in the country fell 19% during CY2020 to 3.17 million tonnes, the company said.
Besides the pandemic, the company also faces the challenge of rising raw material prices. Prices of scrap, nickel, copper and ferro chrome have risen significantly from late 2020.
“The rally in raw material prices eventually pushed up prices of finished goods globally. This phenomenon was also visible for other commodities, including metal, due to pent up demand and economic recovery,” it said.
The company managed to reduce its total external debt (including short term debt) by Rs 906 crore to Rs 1,849 crore as on March 31, 2021.
This resulted in a significant saving in the interest cost, which fell by 18% over FY20 to Rs 464 crore.
“A steady demand in the domestic market across segments during the fourth quarter has helped growth in sales volume and revenue,” said MD Abhyuday Jindal.
He also urged the government to further steps to provide a level playing field to local steel producers.
Like other steel producers in India, Jindal Stainless is also supplying oxygen from its plants to meet the increased demand from hospitals due to the second wave of COVID-19.
“Over 40 MT of Liquid Medical Oxygen (LMO) is being dispatched daily from the Company’s Jajpur facility to meet the increasing demand of LMO in Odisha, Andhra Pradesh, and other states, as required.
“The Company is also airlifting LMO from its Jajpur facility for dissemination in Hisar, as and when required,” it said.