Target steel sales of 7.5-8 million tonne in FY19: JSPL

He also expects EBITDA per tonne to increase by Rs 1,500-2,000 post ramp up of Angul expansion.

Talking about debt, he said the debt levels will not go up from current levels.

On working capital front, he said we are not worrying about working capital but we expect to come out of non-performing asset (NPA) status.

Below is the verbatim transcript of the interview.

Latha: Can you tell us immediately, this year itself how much will steel output increase and what that might do for your EBITDA?

A: The plant has just started yesterday and the commissioning, as we promised, will be in December, so we are exactly on target as far as commissioning of the plant is concerned. The ramping up is going to take place in the next quarter and this added with the electric arc furnace (EUF) facility which we already have, roughly, we should be able to do about 0.5 million addition.

Latha: What will that take the annual output to in FY19?

A: In FY19 we should be able to do close to -- I am not talking only of Angul, but I am talking of Angul and Raigad together, where the capacity has already gone to about 9 million tonne plus. So in FY19 we should be able to do at least around 7.5-8 million tonne.

Sonia: What would this do to your EBITDA? There are expectations that your EBITDA could get to about Rs 9,000 crore by FY19. Is that a doable target?

A: Yes it is indeed. We are working on that and obviously there are number of factors which affect EBITDA. One is the production level; there are margins which are there. So what is going to happen is the margin is also going to improve primarily because the cost of steel making through basic oxygen furnace (BOF) should be lower than the current cost which we have. Therefore, these two factors combined together should be able to give the kind of EBITDA.

Latha: You mean this will give you advantage even in your EBITDA per tonne. Your EBITDA per tonne is likely to be higher by how much?

A: I would say close to about Rs 1,500-2,000.

Latha: You had a problem with banks having to recognise your loan as NPA. Does that make life difficult in any fashion; are you able to find enough money for working capital and completion of other expansions?

A: There were some technical issues with the bank and that is already getting resolved. So, we don’t think that banks have that much of an issue and as you are aware, we are still under Joint Lenders Forum (JLF) but as far as the discussions which they had with the banks, we expect to come out of it very quickly. So, we are not worrying too much about the working capital. We can manage that.

Sonia: Can you tell us what would the cost savings be at the Angul plant?

A: When you are talking about cost saving, that is what I mentioned to you that through BOF route it will be close to about Rs 1,500-2,000.

Sonia: Put together the cost saving and the volume ramp up say over the next few years, what kind of an average EBITDA per tonne are we looking at?

A: The EBITDA margins today are close to about Rs 9,000 or so with BOF being a significant part of this entire thing. We expect that it should certainly go up further to about Rs 10,000.

Latha: Just to complete that point, are you in discussion with banks and do you have some clarity that they will pull you out of NPA status?

A: Yes because there are certain conditions which we need to make and we are already moving towards that in terms of certain equity raising and so on. So we are already working on that. It is a matter of time before we complete that and we certainly expect to come out of it very soon.

Latha: Can you give us any update on any asset sale, what is your debt, what might it be say 12 months down the line?

A: The important thing is that despite increasing our production and putting up this new plant, we have not increased the debt level at all. We remain at the same level. So, that is first positive that we are talking about. Second, we already have with the banks, repayment scheduled and so on and today we are totally clean, there is no overdue today and we expect to continue in the same range.