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Jindal Steel & Power Chairman's Speech > Engineering - Heavy > Chairman's Speech from Jindal Steel & Power - BSE: 532286, NSE: JINDALSTEL

Jindal Steel & Power

BSE: 532286|NSE: JINDALSTEL|ISIN: INE749A01030|SECTOR: Steel - Sponge Iron
May 21, 14:12
-4.7 (-1.91%)
VOLUME 445,438
May 21, 14:13
-4.7 (-1.91%)
VOLUME 4,241,482
Mar 16
Chairman's Speech (Jindal Steel & Power) Year : Mar '17

Dear Stakeholders,

The financial year 2016-17 has ushered in a new dawn for JSPL. A series of initiatives taken over the past two years has started showing results. The early signals of our efforts are visible in the financial results of 2016-17, where the Company has posted its highest ever revenues, backed by highest ever steel production and highest ever export sales in the history of JSPL.

The cancellation of captive coal blocks in August 2014 and the subsequent imposition of a retrospective additional levy of 3,300 crore JSPL had to pay under a court ruling had an adverse impact on the Company''s business model. Many of our long-term investments had to undergo a course correction to tune them in line with the unforeseen realities we had to face. The transformation did need a reasonable time for resurrection. I am happy to share that the laps of transition have been completed successfully. On behalf of the 50,000-strong workforce and a socio-economic ecosystem of 1 lakh families anchored by JSPL, I sincerely thank each one of you for reposing confidence in our ability to resurge through the most challenging times JSPL has faced in its lifetime.

Since inception, the driving force behind the success of JSPL has been the profound vision of our Founder Chairman Shri O.P Jindal for Building A Nation of Our Dreams. The Dream to be an active participant in the socio-economic growth story of the world''s largest democracy, in its journey to emerge as an economic superpower. The Dream that is shared by the entire JSPL stakeholder community. This is the very purpose that keeps all Jindalites motivated, enthused and passionate of what they do; and fuels their quest to constantly find newer ways to improve and outdo their earlier performance. It is our commitment to all our stakeholders that we will continue the journey of exceeding excellence on course of achieving our purpose, as we continue to transform our dreams into reality.

Before I move further, it is pertinent to mention that JSPL faced short-term cash flow mismatches during FY 2016-17, which resulted in temporary delays in meeting a few interest obligations. The situation may have been different if we did not have to pay a retrospective additional levy of 3,300 crore, which added to our debt level and related interest costs. We have been in continuous engagement with our long-term banking partners for suitable solutions, and appreciate the trust and faith reposed by them in JSPL during these challenging times. Since inception, JSPL has had an impeccable track record for meeting all its financial commitments; and remains committed to honour all its current and future obligations. We at JSPL, are confident that by the time the current year 2017-18 comes to an end, the Company would be back to the days of prosperity with a steady increase in our EBIDTA levels, and continue to set new records by outdoing its own performance quarter after quarter, and year after year.

During the challenging times, JSPL was often referred to as a debt-heavy company, with a net debt of around Rs, 46,000 crore. In isolation, the debt levels may appear significantly high. However, when seen in the right perspective, with a diversified and prudently spread out asset base of close to Rs, 75,000 crore, the same debt level would appear rational and reasonable. The entire debt is prudently spread across high-potential business segments - with around Rs, 25,000 crore in domestic steelmaking business with a capacity of 6 MTPA; Rs, 8,600 crore in world-class power generation assets of 3,400 MW; and the balance Rs, 12,400 crore in a 2 MTPA integrated steel plant in Oman, along with 6.2 MTPA coalmining operations in Australia, Mozambique and South Africa.

You would have observed that over the past five years, your Company has transformed its assets from 3 MTPA steelmaking and

1,000 MW power generation capacities to a 8.1 MTPA steelmaker and a 5,049 MW power producer As a conscious element of its expansion strategy, JSPL consolidated its power generation assets at the O.P. Jindal Super Thermal Power Complex at Tamnar, scaling it to 3,400 MW. On the steelmaking front, JSPL spread its operations from Raigarh (Chhattisgarh) by successfully establishing a Greenfield integrated steel complex at Angul (Odisha) and Sohar (Oman) - both being among the largest and most modern in their respective regions. Incidentally, adding to our challenges, by the time our capacities went operational, the global steel commodity cycle and the domestic power sector experienced dynamic changes - not only for JSPL but also for every player in these sectors.

Despite facing significant challenges, JSPL successfully completed the 6 MTPA Greenfield expansion project at Angul (Odisha) in early FY 2017-18, without taking any additional debt in FY 2016-17. The completion and commissioning of 4 MTPA Blast Furnace - the largest in India - is a significant development for the future growth trajectory of JSPL. I am happy to share with you that JSPL has set new benchmarks in completing the Blast Furnace installation in a record time of 27 months, and at lowest costs, compared to the installation time of 45 months taken for Blast Furnace installations of similar size and scale. With the recent commissioning of the 4 MTPA Blast Furnace at Angul, JSPL will enhance its domestic steelmaking capacities to 9.6 MTPA during FY 2017-18. The Angul operational performance, as it keeps picking momentum, will be the fulcrum to effectuate JSPL''s debt reduction roadmap to become relatively debt free in the next three-four years.

Every challenge offers an opportunity, is the path we have continued walking on for the past two years. The path that made us introspect each and every process minutely

- across the length and breadth of JSPL. I am glad to share that the series of measures have not only optimized cost structures, but has enabled us to look at innovative ways of enhancing the overall efficiencies and revenue pipeline - in India and global geographies JSPL operates in.

During FY 2016-17, JSPL''s Raigarh steel plant continued to operate at optimum production levels. The commissioning of India''s first Head Hardened Rail Facility at Raigarh to manufacture Rail Tracks for metros and high-speed trains was a major landmark, taking JSPL to the select league of seven global steelmakers with this capability. The Rail and Universal Beam Mill (RUBM) at

Raigarh successfully completed a major export order of over 1,20,000 tonnes of Rails to Iran to make a mark in the global markets.

Robust demand for Jindal Panther TMT Rebars anchored the acceleration in operational performance at JSPL''s Patratu facility. The Pellet Plant at Barbil posted its highest ever sales and exports during FY 2016-17, enabling JSPL to emerge as the country''s largest pellet exporter. The integrated steelmaking operation at Oman commissioned a 1.4 MTPA Bar Mill and recorded its highest production, effectuating a 50% rise in EBIDTA of Jindal Shadeed. Mining operations spread across South Africa, Mozambique and Australia increased their contribution to the Company''s growth trajectory.

With the indicators of the upward cycle starting to appear, we at JSPL are confident of our abilities and preparedness to swing back to the days of glory, as we take measured steps to enhance our capacity utilizations; steps that would translate into a giant leap forward for the future of JSPL.

The Government of India has recently announced the National Steel Policy (NSP) 2017, with an aim to ramp up domestic crude steel capacity to 300 MTPA by 2030, from the current 125 MTPA levels. This effectively indicates a significant growth in per capita consumption of steel from the current 60 Kg to 160 Kg levels by 2030. The realization of the targets set forth in NSP 2017 offers significant growth opportunities to domestic steelmakers. JSPL is confident of accelerating its production and sales curve by Making in India, Making for the World -through the course of this journey.

On behalf of my 50,000 colleagues, I take the privilege of appreciating the continued support from all our stakeholder segments during the challenging times. The Purpose of existence of JSPL integrally includes value creation for all our stakeholders. Your confidence in JSPL will continue to be a prime mover for us, motivating us to work harder and smarter this year. We all look forward to come back next year with a performance that would qualify as superlative by all stakeholders, including shareholders, of JSPL.

Yours truly,

Naveen Jindal


Source : Dion Global Solutions Limited
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