The Hindu Business Line : Post-merger Jindal Iron & Steel likely to post Rs 802-cr profit

Should the approval come through, then the provisional net turnover of the combined entity (to be called Jindal Iron & Steel Company) for the financial year 2004 will be Rs 4,354.66 crore and its net profit at Rs 802.20 crore. Its operating margin of 33.71 per cent will be better than that of Tata Steel's 32.61 per cent, officials said at a press conference.

According to them, the company policy is to restrict dividend payout to within 25 per cent of distributable profits.

For the financial year 2004, JVSL had a net profit of Rs 528.68 crore (Rs 110.67 crore-loss for the corresponding period in the previous fiscal) on net sales/income from operations of Rs 3,279.78 crore (Rs 2,504.76 crore).

The figures were Rs 967.42 crore (Rs 817.55 crore) and Rs 256.82 crore (Rs 89.15 crore), respectively, for the fourth quarter of last fiscal. The company repaid/prepaid loans worth Rs 115 crore during the last quarter and Rs 416 crore for the full year.

It enhanced its pellet plant capacity from 3 million tonnes per annum (MTPA) to 4.2 MTPA in May 2004. Effective July 2004, JVSL's steel plant capacity is being upgraded to 2.5 MTPA through commissioning the blast furnace set up by Euro Ikon Iron & Steel Pvt Ltd and to be operated by JVSL under an operation and maintenance agreement.

There is a plan to hike this capacity further from 2.5 MTPA to 4 MTPA at a cost of Rs 1,100 crore by the financial year 2006.

The company will also have captive coke supply from September 2004 once the coke project being set up by Euro Coke Energy Pvt Ltd is commissioned. Plans are afoot to set up a 200 MW gas-based power plant, expected to be ready in two phases over December 2004 and September 2005.

For the financial year 2004, Jisco had a net profit of Rs 242.70 crore (Rs 120.98 crore) on net sales/income from operations of Rs 2,190.17 crore (Rs 1,551.69 crore).

The figures were 124.52 crore (Rs 66.16 crore) and Rs 690.54 crore (Rs 529.77 crore), respectively, for the fourth quarter of last fiscal. The company's full year operating margin of 21.41 per cent tops its segment of the industry.

Jisco repaid Rs 239 crore of debt, including Rs 130 crore as prepayment, in the financial year 2004. Its debt equity ratio has reduced to 0.73:1 (1.93:1).

New capacities being added include 0.9 million tonnes in cold rolling, 0.8 mt in galvanising, and 0.1 mt in colour coating.

The total capital expenditure for current fiscal is pegged at Rs 180 crore, Rs 60 crore at JVSL and the balance at Jisco. Additionally, Rs 100 crore from an estimated Rs 200 crore investment in the hot strip facility will be incurred this year.

Next fiscal, total capex is forecast at Rs 280 crore.

To contain the raw material cost and ensure steady supply the company has plans to take the equity stake in Australian coal mines.

In the meantime, coal requirement for a five-year time span has been tied up at Japanese Steel Mill (JSM) price. Long-term target is to bring operating cost to below $150 per tonne of steel, officials said.