DSIJ in conversation with Jindal Steel & Power Limited

Here is our detailed conversation with Jindal Steel and Power Limited (JSPL), a leading player in steel, power, mining, oil and gas and infrastructure in India.

What is your outlook on steel prices? 

• Steel prices might take at least two years to cool down.
• Demand is consistently increasing.
• Steel demand in India is also expected to exceed the production numbers.

How has the current pandemic impacted your business operations? 

• Despite the pandemic situation, JSPL’s operations have displayed resilience, posting the highest-ever production & sales in FY21 of 7.51 (19 per cent growth YoY) and 7.28 metric tonnes (20 per cent growth YoY), respectively. 
• Exports accounted for 35 per cent of sales in FY21 as compared to 13 per cent in the prior year. 
• JSPL has ended the fiscal year on a strong note with sales hitting a new record of 7,86,000 tonnes in March 2021 (up to 62 per cent YoY). 
• The combination of robust domestic demand, attractive export markets and a wide range of products contributed to JSPL, reporting the steepest rise in monthly sales in FY21. ​

By when do you expect to become a net debt-free company?  

• The company had adopted a target of 15:15:50 i.e. Rs 15,000 crore of EBITDA, or earnings before interest, tax, depreciation & amortisation, Rs 15,000 crore debt, and Rs 50,000 crore of sales turnover by 2022-23. 

What are your internal growth targets? 

• For further extension or for further increase in production, without spending or putting any Capex, JSPL feels that it will be in a position to deliver about 9 million tonnes from their plants which is the ultimate goal! 

What are your capacity expansion plans? 

• Capacity expansion planned at Angul from 6 to 12MTPA.
• Further, an increase in capacity at Angul is expected in the future.
• Angul steel plant may emerge as the world’s largest and greenest single-location steel plant. 

What is your outlook on global businesses?  

• Global steel prices are on a rise and are expected to remain buoyant for another 2 years.
• Prices of key raw materials of iron ore & coal are witnessing a downtrend. 
• These would improve YoY margins and sustain them significantly.

What are the key risks for your growth outlook?  

• The steel industry is currently outperforming; however, the risk would be if the demand slows down due to unforeseen circumstances. 
• Any policy change from China could impact. 
• However, there will be robust growth for the next two years for the steel industry. 

What are your top three strategic priorities?

• JSPL strategically aims to be amongst the top 10 lowest Co2 emitting steel companies in the world.  
• This strategic thinking has led to the divestment decision of its coal-fired IPP business, which will result in reducing the carbon footprint of JSPL by almost half.  
• This will now lead to a completely different outlook of JSPL’s business model in the future.