Jindal Steel & Power Ltd Company Analysis Report
Background
Jindal Steel and Power Ltd (JSPL) was formed in 1998 after splitting
from Jindal Strips Ltd. JSPL is the market leader in the coal-based sponge iron
market. The company has four divisions — sponge iron, power, mild steel and
ferro chrome.
JSPL is making huge investments in setting up of steel plants and power
generation plants. The company has made a total investment commitment of over
US $6.25 billion, which is the largest private sector investment in
Chhatisgarh. Moreover, the company has long term plans of setting up a 12.5 MT
steel plant and a 2,500 power plant at Orissa with an investment of $10
billion, and another 11 MT steel plant and 2,600 MW power plant in Orissa with
an investment of over $9 billion.
The company started its global operations after it acquired the
development rights for 20 MT of El Mutun Iron Ore
Reserves in Bolivia , South America . The company has plans to invest $2.1
billion over next few years in order to set up an integrated 1.7 MT steel
plant, 450 MW power plant, 6 MT Sponge Iron and 10 MT Iron Ore Pellet Plant.
This is the largest ever investment in any single project in the country.
JSPL is part of the Indian multinational Jindal Organisation. Naveen
Jindal is the Executive Vice Chairman and Managing Director of the company. Its
promoters hold nearly a 60 per cent equity stake in the company.
|
Category
|
No. of shares
|
Percentage of total shares
|
|
Promoters
|
90,628,615
|
58.6
|
|
Indian
|
78,524,615
|
50.8
|
|
Foreign
|
12,104,000
|
7.8
|
|
Non-promoters
|
64,024,068
|
41.4
|
|
Institutions
|
40,292,248
|
26.1
|
|
Non-institutions
|
23,731,820
|
15.3
|
|
Total Shares
|
154,652,683
|
100.0
|
|
Source: Prowess
|
|
|
Product mix
Apart from steel, the company's product range comprises rails, parallel
flange beams, sponge iron, ferro chrome and heavy machinery.
|
Products
('000 tonnes)
|
2007-08
|
2006-07
|
|
Sponge iron
|
1,186
|
1,196
|
|
MS round
|
292
|
233
|
|
HC ferro crome
|
18
|
31
|
|
Hot metal / pig iron
|
1,251
|
558
|
|
Parallel flange
|
435
|
193
|
|
Universal plate / coil
|
240
|
976
|
|
Other finished steel products
|
73
|
17
|
|
Other semi finished steel products
|
1,136
|
573
|
|
Machineries
|
2
|
3
|
|
Source: CRISIL Research, Annual
report
|
|
|
Technology
The company's steel manufacturing plant at Raigarh uses the EAF route.
The steel melt shop (SMS) is equipped with a ladle furnace and vacuum
de-gassing and has continuous casting facilities for wide slabs, rounds and
blooms. JSPL has also set up a state-of-the-art ‘rail and universal beam
rolling mill' at Raigarh. The mill has been designed to manufacture rails of up
to 120 metres. The plant is also equipped with a flash butt welding plant for
welding rails from 240-480 metres.
Plant location
The company's sponge iron unit, power plant and steel manufacturing
facilities are located at Raigarh, Chhattisgarh. It also has a unit at Raipur India
|
Location
|
Capacity
|
|
|
|
Products
|
('000 tonnes)
|
|
Raigarh, Chhatisgarh
|
Sponge iron
|
1,370
|
|
|
Mild steel
|
2,400
|
|
|
Ferro alloys
|
36
|
|
|
Power (MW)
|
333
|
|
|
Hot metal / pig iron
|
1,500
|
|
|
Others
|
1,750
|
|
|
Machinary and castings
|
12
|
|
|
Ingots
|
30
|
|
|
CF castings
|
3
|
|
Source: Annual report
|
|
|
Financials
Table 25: JSPL Ltd - Key financial indicators
|
|
|
31-Mar-06
|
31-Mar-07
|
31-Mar-08
|
|
Operating income
|
Rs million
|
25,836
|
35,431
|
54,868
|
|
Operating margins
|
Per cent
|
43.2
|
40.3
|
44.3
|
|
Net profits
|
Rs million
|
5,829
|
7,052
|
12,745
|
|
Net margins
|
Per cent
|
22.6
|
19.9
|
23.2
|
|
RoCE (return on average capital employed)
|
Per cent
|
33.4
|
15.9
|
20.2
|
|
Gearing
|
Times
|
1.8
|
2.1
|
1.9
|
|
Net cash accruals to debt
|
Times
|
0.2
|
0.2
|
0.2
|
|
Interest coverage
|
Times
|
6.2
|
9.0
|
5.6
|
|
Current ratio
|
Times
|
1.1
|
0.6
|
1.5
|
|
Source: CRISIL Research
|
|
|
|
|
