Jindal Steel to return to profit by end of FY18: CEO Ravi Uppal
CEO Ravi Uppal’s comment came after Jindal Steel and Power posted loss for a 10th straight quarter, even as Q4 loss narrowed to Rs100 crore from Rs686 crore a year earlier
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Mumbai: Jindal Steel and Power Ltd (JSPL) is likely to return to profitability by the end of the current fiscal, managing director and group chief executive Ravi Uppal said in a phone interview on Tuesday.
Uppal said the firm plans to increase its steel production by 50% in the current fiscal year. “We are on the strong road to recovery, and in FY18 we should be able to come with net positive number for PAT (profit after tax),” he said.
On Tuesday, JSPL reported its 10th straight quarterly loss. Loss for the fourth quarter ended 31 March, however, narrowed to Rs100 crore from Rs635.84 crore a year earlier, helped by better performance of its steel business.
In the current fiscal, JSPL plans to sell 7.5 million tonnes of steel compared with 4.8 million tonnes in 2016-17 due to commissioning of its Angul plant in Odisha, Uppal said. The company, the largest exporter of steel pellets, also plans to export over a million tonnes of steel and about 2 million tonnes of pellets this year, he said.
“The overall domestic consumption (steel) in India could strengthen to 6-7% growth in FY18 as domestic demand picks up, given the government’s push on infrastructure. Any start of capex by the private sector, which has been dormant over the past couple of years, could further amplify this demand,” JSPL said in a statement on Tuesday.
Last year, JSPL defaulted on interest payments on non-convertible debentures due to cash flow mismatches. At that point, the company said it would sell stakes in certain units of its steel business, set up joint ventures if need be, and seek a buyer for all its power assets in India. Its previous efforts to sell overseas mines did not bear fruit.
Indian steel makers, including Tata Steel Ltd, JSW Steel Ltd and JSPL, have in recent years been hurt by an unprecedented influx of steel imports from countries such as China, Japan and South Korea.
Last week, JSW Steel’s fourth-quarter profit tripled from a year ago, beating analysts’ estimates, on the back of higher production and sales. Tata Steel also narrowed its losses and was able to sell steel at a higher price.
JSPL said total revenue from operations in the quarter rose 24.1% to Rs6,756.07 crore from Rs5,442.48 crore a year earlier.
Five analysts polled by Bloomberg had expected JSPL to report a consolidated loss of Rs412 crore, while six analysts had expected net sales of Rs6,323.90 crore. Shares of the company, however, fell 5.35% on BSE on Tuesday.
JSPL said revenue from its steel business rose about 15% to Rs5,261.40 crore while those in power business rose about 8.5% to Rs1,564.58 crore. Total expenses during the fourth quarter rose 6.7% to Rs7,074.10 from Rs6,629.87 crore.
Of the company’s 3,400MW power capacity, only about 1,200MW is operational, while the rest is stranded for the lack of fuel supply and power purchase agreements (PPAs).
“We have not seen PPAs until now but are hoping that the government will come with more PPAs. Meanwhile we have signed bilateral agreements with industrial consumers and are actively participating in national exchange,” Uppal said.
Naveen Jindal-led JSPL last year said it plans to sell a 1,000MW power plant to elder brother Sajjan Jindal’s JSW Energy Ltd to bring down debt. The deal is on track and there is time till June 2018 to complete the transaction, Uppal said.
There will be no slowdown to the deal despite JSW Energy’s chief executive Sanjay Sagar deciding to step down, Uppal said.
For the year ended 31 March, JSPL reported a 11.4% rise in revenue from operations to Rs22,696.24 crore. Consolidated net loss for the year narrowed to Rs2,537.52 crore from Rs3,087.26 crore a year earlier.
JSPL had a consolidated net debt of Rs45,490 crore as on 31 March.