JSPL plans to list Jindal Power in FY10

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JSPL plans to list Jindal Power in FY10

Jindal Steel & Power is looking at listing Jindal Power in FY10, says company's Director – Finance.

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Jindal Steel & Power has declared its second quarter results. The company's Q2 consolidated net profit was up 6% at Rs 808.3 crore versus Rs 762.2 crore.
Commenting on the results, Sushil K Maroo, Director - Finance, JSPL says, turnover is down 28% due to lower price realisation. Uptick in profit, he says, is due to the power business. The company has 10 units of 135 MW each. The first unit would commence production in January 2010. "We will go for expansion of 2400 MW, which will get operational in 2012-13." He says, the company is planning to list Jindal Power in FY10.

Here is a verbatim transcript of the exclusive interview with Sushil K Maroo on CNBC-TV18. Also watch the accompanying video.

Q: Could you highlight the numbers on a standalone basis first, the steel aspect and how realisations and volumes have panned out and first on the 340 megawatts of power before we address the merchant power business?

A: If we talk about the results, on a standalone basis Jindal Steel and Power's results this quarter have been lower. It is about Rs 305 crore profit compared to Rs 450 crore last year in the same quarter. But if we look at it on a consolidated basis, it is higher than the first quarter Rs 300 crore to Rs 305 crore. This is largely because the turnover is also down by about 28% and that has happened because the price realisation is lower. Steel prices when we compare it with the last year's same quarter, it has gone down by about 43%. Going forward, the same price is continuing. But when we look at the consolidated numbers, it is better; it is 6% higher in profits. We have done profit of more than Rs 800 crore compared to Rs 760 crore same period last year. This largely has come from power, the subsidiary, Jindal Power Limited.

Power has done better in this quarter as well, almost about 70% profit is coming from power and that was the case in the last quarter as well. Going forward as well, as we mentioned in earlier discussions as well the power profits are going to basically dominate the total Jindal Steel and Power numbers.

Q: If you could address the power segment really because that seems to have come in really well. Your consolidated profit has come in up about 7%, power has contributed a fair chunk to that. What sort of operating margins are you working at? What are the realisations? Currently, how much is operational? I believe it is about 1000 megawatts in terms of merchant power. Could you give us an outline for the trajectory and your scaling up of the power business?

A: In this quarter in power specifically, we had a low PLF (Plant Load Factor). We had about 84% PLF in the second quarter compared to the first quarter of the current year when we had about 96% PLF. This is largely because we had two units in shutdown conditions and besides in the monsoon it is difficult to do power generation and the sale prices also remain suppressed.

But if you look at the numbers, we have done about Rs 515 crore profits in power, compared to the quarter of Rs 314 crore in the last year. In fact when we look at the first quarter in the current year, we have done about Rs 780 crore profit. We expect that Q3 and Q4 would be better because the units that had shutdown have already started doing well and should do well in the next two quarters. You asked about the 1350 megawatt power plant. There are 10 units of 135 megawatt each and we are expecting the first unit to go on stream in January and thereafter every two months one unit to go for production. So, next year and the next to next year will have a positive impact of this power plant going on stream.
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