JSW Steel Ltd Company Analysis Report
Background
JSW Steel Ltd of the Jindal Group was incorporated in
1994. Jindal Iron & Steel Co Ltd (JISCO) promoted Jindal Vijayanagar Steel
Ltd, which was later renamed as JSW Steel Ltd. Today, JSW Steel Ltd has a fully
integrated steel plant with its product palette ranging from pellets to colour
coated steel.
Its promoters hold around 47 per cent stake in the
company, with foreign institutional investors (FII) holding a significant share
of above 26 per cent and the public holding about 9 per cent.
|
Category
|
No of Shares
|
Percentage of total shares
|
|
Promoters
|
87,893,205
|
47.0
|
|
Indian
|
82,188,593
|
43.9
|
|
Foreign
|
5,704,612
|
3.0
|
|
Non-promoters
|
99,155,430
|
53.0
|
|
Institutions
|
64,806,159
|
34.6
|
|
Non-institutions
|
34,349,271
|
18.4
|
|
Total shares
|
187,048,635
|
100.0
|
|
Source: Prowess
|
|
|
Product mix
The company manufactures galvanised steel products.
Its upstream product mix includes mild steel HR coils, mild steel HR plates and
sheets. Cold rolled-close annealed (CRCA) sheets and coils, HR plates and
galvanised sheets and coils are its downstream products. Its galvanised
products are marketed under the brand name ‘GALVPLUS'. JSW claims to be the
only integrated flat steel producer in South India .
The company's products find application in diverse
industries such as automobiles, infrastructure, storage tanks, pipes and
transmission towers etc.
Table 17: JSW Steel Ltd -
Production
|
Products ('000 tonnes)
|
2007-08
|
2006-07
|
|
MS Slab
|
3,171
|
2,652
|
|
Hot rolled coils
|
2,171
|
2,155
|
|
Cold rolled coils
|
862
|
770
|
|
Galvanised coils
|
764
|
714
|
|
Hot rolled steel plates
|
226
|
182
|
|
Colour coating coils / sheets
|
90
|
52
|
|
Steel billets & blooms
|
456
|
-
|
|
Rolled products
|
329
|
-
|
|
Source: Annual report
|
||
Technology
Out of its total capacity of 3.8 MT, 1.6 MT is
manufactured using the Corex technology while the remaining was produced using
the blast furnance. The Corex process uses low-grade non-coking coal, which is
not only easily available globally, but is also 40 per cent cheaper than coking
coal. Also, this process eliminates the coke oven battery and sinter plant
stages, which are essential in the conventional blast furnace route. However,
it does require oxygen (around 1 tonne for every tonne of hot metal). The Corex
process releases a significant quantity of gas that has a high calorific value,
which can be used to generate power.
Plant locations
The company has its plants at Bellary
and Vijaynagar in Karnataka, and also at Tarapur and Vasind in Maharashtra . Moreover, it has upstream facilities such as
a raw material handling plant, coke oven, corex plant, pellet plant, continuous
casting plant and a hot strip mill. JSW Steel's registered office is located at
Mumbai.
|
Location
|
Capacity
|
|
|
|
Products
|
('000 tonnes)
|
|
Toranagallu (
|
Hot rolled coils
|
2,500
|
|
|
Hot rolled steel plates
|
320
|
|
|
Hot rolled steel plates
|
320
|
|
Vasind (Thane, MAH)
|
Cold rolled coils / sheets
|
1,825
|
|
|
Colour coating coils / sheets
|
100
|
|
|
Galvanised coils / sheets
|
900
|
|
|
MS slabs
|
3,800
|
|
Source: CRISIL Research, Prowess
|
|
|
Financials
Table 19: JSW Steel Ltd - Key financial indicators
|
|
|
31-Mar-06
|
31-Mar-07
|
31-Mar-08
|
|
Operating income
|
Rs million
|
61,035
|
86,780
|
124,652
|
|
Operating margins
|
Per cent
|
26.9
|
32.2
|
28.2
|
|
Net profits
|
Rs million
|
8,565
|
13,039
|
15,787
|
|
Net margins
|
Per cent
|
14.0
|
15.0
|
12.7
|
|
RoCE (return on average capital employed)
|
Per cent
|
21.2
|
23.2
|
18.1
|
|
Gearing
|
Times
|
1.2
|
0.9
|
1.9
|
|
Net cash accruals to debt
|
Times
|
5.2
|
6.8
|
6.0
|
|
Interest coverage
|
Times
|
0.2
|
0.4
|
0.2
|
|
Current ratio
|
Times
|
0.8
|
0.9
|
0.8
|
|
Source: CRISIL Research
|
|
|
|
|
