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Jindal Steel & Power Ltd.


Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE749A01030 | SECTOR: Steel - Sponge Iron

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Jan 23, 16:00
179.20 0.30 (0.17%)
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Jan 23, 15:59
180.00 0.85 (0.47%)
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Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012 2011 2010

Chairman's Speech

Dear Shareholders,

FY 2017-18 was a year of record-breaking performance, marked by the highest ever steel production and sales. JSPL posted the highest ever annual revenues in its history, marked by a standalone revenue growth of 13% and consolidated revenue growth of 23%. The fourth quarter of FY 2017-18 saw the highest ever steel production across all the locations, including Raigarh, Angul and Oman, for JSPL. I am happy to share that this turnaround story has continued into the first quarter of FY 2018-19, which saw JSPL posting consolidated net profits after 14 consecutive loss-making quarters. In fact, in Q1 FY 2018-19, JSPL posted its highest ever quarterly revenue, reporting net profit on both consolidated and standalone basis. This is a clear outcome of the hard work of our 50,000 colleagues over the last three years.

This performance has come in the face of many challenges and the massive impact of coal block de-allocation on our operations in August 2014. JSPL had to subsequently pay additional levy of around Rs.3,300 crore. However, in 2018, we successfully overcame these challenges to emerge as one of the three large private sector steel companies that have remained solvent.

A series of factors propelled our positive performance, most significant of them being our enhanced focus on operational and cost efficiencies, and our strong product mix aligned to the evolving marketing needs.

Milestones of our journey

The journey has been marked by many important milestones of success.

A significant achievement at the start of FY 2018-19 is the prestigious first-ever global tender won by JSPL for supply of Rails to Indian Railways. I am pleased to inform you that we have started the deliveries in record ti me of two weeks after bagging the order by sending the first rake load on 15th August, 2018. What makes the order, particularly noteworthy is the fact that JSPL was the only rail manufacturer to bag the order in a global tender that saw participation from world’s 7 leading rail manufacturers. While we have to supply the 1 Lakh Tonnes order over a period of one year, we are aiming to complete the deliveries within 4 months so as to emerge as a reliable long-term partner for Indian Railways.

During FY 2017-18, we successfully completed and commissioned the 6 MTPA integrated steel plant at Angul, Odisha. The successful commissioning of the 4,554 m3 Blast Furnace and the 250 MT per heat Basic Oxygen Furnace (BOF) was the last leg of the Angul Greenfield Project, which we achieved at the end of December 2017. We are on track to sequentially ramp-up capacity utilisation at Angul, which will be a strong driver for future growth of JSPL.

We have now concluded our major capital expenditure programme for JSPL, and are geared up to accrue the fruits of our hard work. The enhanced cash flows will enable us to utilise internal accruals for effectuating our Debt Reduction Roadmap over the next couple of years.

We have reduced JSPL’s debt by over Rs.5,000 crore, which has seen the consolidated net debt come down from the peak levels of Rs.47,000 crore to Rs.42,000 crore currently. We are targeting to further reduce JSPL’s debt by around Rs.15,000 - 20,000 crore by 2021 to become a relatively debt-free company. “Neither a lender, nor a borrower be”, are the famous words of Shakespeare around which all our financial philosophies will revolve around hereon.

You would also be happy to know that the integrated steel plant at Raigarh, Chhattisgarh, continues to be amongst the most efficient steel plants in the world, with capacity utilisations of 95% plus. We aspire to further improve the capacity utilisation through a series of initiatives that are under implementation.

Further, the 1 MTPA Rebar and 0.6 MTPA Wire Rod Mills at Patratu have been running at peak capaciti es through the course of FY 2017-18. The 9 MTPA Pellet Plant has set yet another record this year by producing 6.86 MTPA. The iron-ore mines at Tensa, Odisha, continued their optimum capacity run. The Raipur Machinery Division conti nued to impart a cuffing-edge to our finished and value-added portfolio, while Oman shone with its 100% capacity utilisation during FY 2017-18.

Making a Difference through the year

These operational highlights were only one part of our turnaround story. We successfully managed to raise Rs.1,200 crore through our first ever QIP during FY 2017-18. The fact that the QIP saw investors’ interest of over 2.5 times, the subscription amount at the top end of price band at Rs.233 per share clearly underlines the confidence of the investors community.

You would be glad to know that in FY 2017-18, the promoters of JSPL have infused part of fresh equity out of total commitment of Rs.700 crore, by way of preferential issue. This is clearly a sign of the confidence Jindal family has in the future value being created by JSPL.

With three leading credit rating agencies - CRISIL, CARE and ICRA - upgrading JSPL to Investment Grade Ratings with Stable Outlook, we are clearly on the right track for Making A Difference, and emerging as a blue-chip again.

On track with financial growth

We recorded our highest-ever annual revenues of Rs.27,841 crore and ended FY 2017-18 with overall EBIDTA standing at 23%, against 21% in the previous fiscal. Every passing quarter of the fiscal enhanced our profitability and JSPL recorded a net profit in Q4. The EBIDTA margins too continued the encouraging climb.

The growth during the last fiscal was largely driven by the Steel business. The Overseas business assets continued to show encouraging growth, with Jindal Shadeed Oman emerging as the rising star. Like our private power sector peers, JSPL too has been operati ng on sub-opti mal capacity utilisati on levels, primarily due to low coal availability. However, we are confident that the slew of initiatives undertaken by the Government will rejuvenate the power generation segment.

Looking ahead

This level of performance had appeared extremely difficult around 12-15 months ago. I express my heartfelt gratitude to all stakeholders who have stood behind us during this challenging phase. We would like to thank Government of India, Government of Odisha, Government of Chhattishgarh, Government of Jharkhand, for their whole hearted support. The future, from where I see it, is bright, and we are poised to capitalise on all opportunities that lie ahead of us.

Ten years ago, Boston Consulting Group ranked JSPL as the second highest value creator in the world. Since then, we have manifested a dream to emerge as the world’s highest value creator.

Yours truly,

Naveen Jindal