India’s Jindal Stainless Limited (JSL) has announced capex plans to increase melting capacity to 2.10mn mt from the existing 1.10mn mt which is a two-fold increase and is estimated to be completed by Q3 FY2023 or December 2022.
The melting capacity expansion is worth Rs5.3bn ($71.6mn) from a total of Rs21.5bn approved for the brownfield expansion plan. The capex also includes commissioning combo line for downstream expansion of Hot Rolled Annealed Pickled (HRaP) by 1.5 times and expansion of Cold Rolled Annealed Pickled (CRAP) by 1.7 times. HRAP will be increased to an annual capacity of 1.25mn mt and CRAP to 0.75mn mt.
The company’s rationale for ramping capacities is to meet the rising demand from domestic and international consumers boosted by the post-pandemic recovery across sectors. The outlook for stainless steel demand remains robust as vaccination drives have picked up, liquidity is improving and economic recovery will continue as business sentiments improve. The government’s push towards infrastructure development would also increase demand.
Jindal Stainless commented on the suspension of Countervailing Duty (CVD) announced by the government which has resulted in the share of imports rising to 34pc in Q1FY22, which was 24pc in Q4FY21.
Sales volumes in Q2 grew by 168pc to 236,852mt compared to a year ago. The rise in raw material prices and freight costs increased further in Q1, notes JSL. Stainless steel demand in Q1 was impacted by state-wise lockdowns amid the second wave. The company, therefore, increased its share of exports in Q1. Demand from key segments including railways, auto, pipe and tube segments only started to get better towards the end of Q1.
Financials
Net revenue in Q1 on a standalone basis jumped 204pc from a year ago quarter to Rs38.4bn and net profit was reported at Rs2.71bn against a net loss of Rs0.87bn last year.
($1=74.51)