JSPL’s realisation takes a hit of 16-17% over June, July post export duty imposition

(Representative image)

Jindal Steel and Power Ltd (JSPL) has been witnessing lower realisation for the month of June and July by 16-17 percent or Rs 7,000-8,000/tonne after the government imposed export duty on steel products, said the company’s new Chief Executive Officer Ramkumar Ramaswamy on a conference call after the company announced Q1FY23 result.

The company's realisations were higher by 12 percent during the quarter thanks to higher prices of steel for the month of April and May. However, the prices started softening from June onwards.

On May 22, India announced an increase in duty on exports of iron ore, up to 50 percent from 30 percent, and imposed an export duty of up to 15 percent on some steel intermediaries. Steel prices have rallied globally and almost doubled from their levels in March 2020.

Ramaswamy expects cost input pressure benefits to trickle in the subsequent quarters given coking coal prices have come down to $230/ tonne from $500/tonne in the previous quarter while domestic iron ore prices slid substantially by Rs 2,000/tonne over the last two months.

On a sequential basis, JSPL’s consolidated gross revenues fell eight percent to Rs 14,738 crore due to lower steel and pellet sales partially offset by higher realisations. Adjusted profit after tax was up 5 percent quarter-on-quarter to Rs 1,929 crore on the back of lower operating profit, partially offset by lower finance costs.

The management did not take media questions during the call. But they said that the company would be able to maintain its share of exports at more than 20 percent of overall production for the ongoing financial year 2023 at a number of more than 2 million tonnes as compared to 2.5 million registered in the previous financial year due to significant currency depreciation in the recent past.

JSPL will continue to aim to become net debt free by the end of FY23, the management said.

The company’s net debt to EBITDA has improved to 0.54 times from 0.57 times in the previous quarter. Proceeds from the investment of Jindal Power Ltd helped the company reduce consolidated net debt by Rs 1,149 crore in 1QFY23 to end the quarter at Rs 7,727 crore.