JSL Stainless has announced its FY11 results. The company's FY11 consolidated net profit was down 19% at Rs 319 crore versus Rs 392 crore. Its FY11 revenues were up 22% at Rs 7,534 crore versus Rs 6,149 crore.
In an interview with CNBC-TV18, Arvind Parakh, CFO, JSL Stainless says, profits were low on account of lower exchange gain. He further says, the company will maintain margins at 14-15% going forward. Also read: JSL Stainless FY11 cons net profit down at Rs 319 cr Below is the verbatim transcript of his interview with Latha Venkatesh and Sonia Shenoy of CNBC-TV18. Also watch the accompanying videos. Q: Could just give us your quarter four numbers? A: The quarter four was slightly impacted because of the Orissa operations where sales were up by about 6-7%, and earnings before interest, taxes, depreciation and amortization (EBITDA) was marginally down. For the whole year, on a consolidated basis, the top-line was up by almost 23% to Rs 8,000 crore. Profit before tax and exceptional item was up by 30%. The profit is down by 90% largely because of the exchange fluctuations, the gain from Rs 299 crore down to Rs 75 crore. So, the profit after tax (PAT) is down by 19% largely because of exchange gain. But at operational level, things have improved quarter-on-quarter. Overall, things are definitely much better than what we had anticipated. Q: You are saying is that last year same time you had an exceptional gain in forex, right? A: That is right. From Rs 292 crore, it is down to Rs 75 crore. So, it is a gain in both the years. From Rs 292 crore for year ending 09-10 the exchange gain is down to Rs 75 crore in the current year. That is the reason for the drop in profitability. We have a lot of subsidiaries which are highly operationalised, we have got the Indonesian subsidiary. We have got two subsidiaries in India. So, on a consolidated basis, the profit is up by 30% to almost Rs 398 crore. So, operationally it has been a better performance. Q: You have a consolidated audited numbers also over here, but even there your earning per share is down from Rs 24 to Rs 16.50 or Rs 17. A: That is because of two reasons. One, because of the dilution; there has been some conversion. We have issued foreign currency convertible bonds. They got converted in the last quarter of this year itself. Second reason is the minority interest. If you see on an absolute basis, that was our number. But earning per share (EPS) wise, yes, it has got impacted. Q: You were telling us about your margin performance on the EBITDA line, what kind of margins do you think are sustainable in FY12 on this base of about 16% EBITDA margin performance that you are sitting? A: If you see the EBITDA per tonne or EBITDA percentage was down, but the main factor for that was our Orissa operation. There our linkage is yet to start for our own captive power plant. Pending that, we were selling it to the grid where the grid prices came down and even the e-auction coal prices have gone up. So, the Orissa operations got impacted. That is why the overall EBITDA per tonne or percentage as you are saying has got impacted. At our main stainless steel operations, the margins would be around 14-15%. This year we will have to wait and see because that we have doubled our capacity. From 70,000-80,000 tonne, which is already operational, we are also adding another 800,000 tonne of steel smelting capacity at Orissa. And that will get operationalised fully downstream in terms of finishing facilities in the current year. So, we will be running a 1.5 million tonne stainless steel operations, gradually things will start picking up. _PAGEBREAK_ Q: You did about 18% EBITDA margins in FY10. FY11, the overall margins work out to 16%. What did you do in the fourth quarter? What do you suspect you are going to do in the first quarter of the current year, for which you will have a very good idea? A: The fourth quarter our margins were down to around 14.75%-14.8%. They were definitely down on a totality basis or if you see quarter on quarter. But I guess going forward we will be maintaining around 14-15% margins on a sustainable basis. Going forward once the Orissa operations get fully kick in, things will improve. But till that time, yes, the margins will be stabilising around the current level of 14-15% plus. Q: Could you just give us break-up of how the export business is looking as well? Although forming a very small percentage of your sales, export has been growing at a faster pace, what kind of export growth are you hoping to see in FY12? A: Over the last four-five years, our focus has been more on the Indian market because the Indian market is growing by 12-13-14%. It is already a 2.2 million tonne stainless steel market. Our exports, which use to be 40-50% of our turnover, almost six-seven years back, are now down to 20%. But exports in terms of value are growing, both in terms of volume and value largely because there have been revival both in the European markets as well as the Asian markets. Our exports are going up. But our focus will be still on the domestic market. Overall basis, if you see last year 09-10, 10-11, almost 20% of our turnover is on the export market. But with the increased volume coming in, we will still be around 20-25% going forward. Q: What is your total debt and how does it compare to equity? A: Debt/equity is little on the higher side. It was 4:1 now, down marginally to 3.8. The debt is little over Rs 8,500 crore. The entire project is yet to kick in, the project is getting a little skewed on and slightly delay, that is why the debt/equity is slightly on the higher side. Q: Did you have a debt recast or didnDiscover the latest Business News, Sensex, and Nifty updates. 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