Jindal Steel and Power (JSPL) swings into black, posts Rs 2,567-crore profit

Jindal Steel and Power (JSPL) reported a net profit of Rs 2,566.7 crore on a consolidated basis in the quarter ended December 31. It had incurred Rs 218.6-crore loss in the corresponding quarter a year ago. Revenue in the quarter was Rs 10,898.7 crore, nearly 45% higher year-on-year (y-o-y), as power generation spiralled 120% on year to 4.2 billion units and steel sales increased 12% to 1.9 million tonne (MT) amid rising long steel and flat steel prices.

The firm’s earnings before interest, tax, depreciation and amortisation (Ebitda) in the quarter was Rs 4,252 crore, registering an annual growth of 134%. Ebitda margins increased 15 percentage points to 39% on falling global coal prices which fuels both its steel and power businesses. In line with its roadmap, the company has decreased its debt levels to Rs 25,621 crore at the end of the quarter, Rs 9,836 crore lower than the same period last year. Lower debts also led to finance cost falling about 20% to Rs 728.3 crore in the three-month period.

The company’s power plant utilisation levels increased as it sold more power in the spot market through the power exchanges, JSPL managing director VR Sharma said. Of the 3,400 MW of its total generation capacity, around 30% is tied up with power purchase agreements. The firm expects its coking coal mines in Australia to start production in April. “We expect the first vessel in June and we can use our own coking coal for our steel production,” Sharma told FE.

JSPL’s subsidiary Jindal Power (JPL) was declared as the successful bidder for Chhattisgarh’s Gare Palma IV/1 coal block in the December quarter. JPL quoted the highest bid of 25% revenue share for the mine in the maiden commercial coal auctions. The block, with an annual peak production capacities of 6 MT, earlier belonged to JSPL, before the Supreme Court in its September 2014 order had cancelled licences of 204 captive coal blocks.

The block was auctioned off again in November, 2019 where JSPL was the highest bidder, but the government had cancelled the auction thereafter. The coal block is located close to JSPL’s Raigarh steel plant and the Tamnar power plant in Chhattisgarh.