Jindal Steel and Power Ltd (JSPL) has posted a weak set of Q4 numbers with a loss of ₹371 crore as the steel sector continues to be stressed and power demand seems dim. Speaking to Bloomberg TV India , JSPL Managing Director and Group CEO Ravi Uppal says the government’s decision to impose Minimum Import Price (MIP) helped steel sector improve realisation while the Ujwal Discom Assurance Yojana (UDAY) is set to improve the outlook on power sector. The fourth quarter will mark a turning point for JSPL, he said.
Did some of the government moves such as safeguard duty and MIP help operationally? Or are you still seeing some pressure?
Well, we are quite happy with the performance of the fourth quarter. I would say that the fourth quarter would mark a turning point for JSPL. The last 18 months have been a tough period as the price of steel went down month after month. But, I think after the introduction of MIP, positive developments have taken place. Fortunately, the international prices have also gone up now and they are almost at the level of MIP or slightly higher than that. So, I think the increase in prices has definitely come as a much needed relief for the steel industry and as a result of this, our earning, both at the EBITDA level and contribution, has risen and are considerably well in the fourth quarter as compared with third quarter in the same year as well as the same quarter in the previous year. EBITDA is up by 59 per cent. Our volumes have also gone up.
Our Oman plant was commissioned and from the domestic markets also we were able to deliver a lot more steel. The volumes have also gone up by 39-43 per cent in the domestic as well as the export markets.
All in all, the steel business of JSPL has done well and set the stage for continued better performance in the first quarter of FY17. Price realisation has definitely improved compared with how it was in November 2015 to February 2016. But, I think we still have more distance to go before the price becomes sustainable.
Steel has been stable at the EBIT level, but power has been a laggard. Can you run us through what’s really happening on that front?
As far as steel is concerned, we have done much better, especially in the fourth quarter. The volume really rose and we have been able to deliver 18-per cent higher sale in the steel business compared with the previous year. Even in international business sector, we have grown by about 12 per cent at the consolidated sales level.
As far as power is concerned, although our units are fine and could deliver as much power as required, somehow the demand for power has been quite tepid. And that has resulted in lower utilisation of our power capacity during the year. We were really hoping that the demand would really look up because a large part of country is still going without power supply.
So, as the latent demand is pretty large but as the health of the discoms is restored after the UDAY scheme is implemented, I think the demand will surely go up for power as well. But last year, the plant load factor (PLF) was not as much as we hoped it would be and we really look forward to much more dispatches in the weeks and months to come.
How’s the PLF been in this quarter? And what’s the outlook going forward?
As I mentioned, the PLFs that we had on the power was lower compared with what we had in the same quarter last year. And there is definitely some room for the PLFs to go up. We have units which are fully commissioned, synchronised and ready to go. So, we are really looking forward to higher demand from consumers.