JSPL posts ₹2,567-cr profit in Q3 on higher pent-up demand

The pent-up demand arising post the unlocking of the economy and hardening steel prices has aided Jindal Steel and Power Ltd (JSPL) in reporting consolidated net profit of ₹2,567 crore in the third quarter ended December 31, 2020 as compared to a net loss of ₹219 crore in the same quarter last fiscal.

The company’s decision to keep operating the plant even during Covid-19 times bolstered the bottomline, a top company official said.

The consolidated net revenue in December quarter stood at ₹10,534 crore, registering year-on-year growth of about 40 per cent. The firm’s standalone production of steel, including pig iron, rose to 1.93 million tonnes in the December quarter, a year-on-year growth of about 20 per cent. This is the highest ever standalone steel production volume for the firm.

“The major decision to continue running the plant during Covid-19 has given us an edge over others,” VR Sharma, Managing Director, JSPL, told BusinessLine. “That is the single biggest reason that we could get a lead over others, rope in more and more customers, and win the confidence of customers worldwide.”

“When the country was locked down the domestic demand came down to zero,” he said. “So we opted to export, and started booking overseas orders. We could bridge all our losses during the first quarter (of FY2021) itself.”

The company has also been helped with a rise in steel prices, which began rising mid-2020 after falling for months, though Sharma played down this as a factor in the company’s turnaround.

“Higher steel prices are a worldwide phenomenon. Exports realisation is much more than domestic prices,“ he said. But as domestic demand began returning mid-August, “we tapered down our exports, because our first choice is to supply to domestic customers, those who are long-term users”.

JSPL had won the Gare Palma IV/1 mine in Chhattisgarh in the recently-held coal block auctions by the Ministry of Coal. “It will take 5-6 months to get a complete takeover of the mine from Coal India and restart operations,” after which the group’s power subsidiary hopes to get a continuous supply of coal, Sharma said.