Jindal Steel & Power held a conference call on 02 November 2021 to discuss the results for the quarter ended Sep'21 and way forward. Mr. V.R. Sharma - Managing Director and Mr. Hemant Kumar – CFO of the company addressed the call.

Highlights of the Concall

• JSPL's sales volume surged 32% QoQ and 10% YoY to hit a record of 2.13 million tonne during the quarter despite dampness in domestic demand amid monsoons. This was achieved due to higher exports. Share of exports increased to 40% against 34% in Q1FY22. The company expects that, as domestic demand is picking up well, exports would slow down but should remain at 25-40% of total sales.

• The company received additional 1mtpa consent to operate (CTO) for blast furnace at Angul plant, raising steel capacity from 8.6 mtpa to 9.6 mtpa.

• JSPL has been declared as the preferred bidder for Kasia Iron Ore Mine in Odisha. Kasia Mine has a large geological resource of 278 million tonnes of iron ore and it consists of an average Fe grade of approx 62.5%. Kasia is an operational mine having an Environmental Clearance (EC) of 7.5 MTPA. The mine is only 17 km away from JSPL's Barbil pellet plant. Iron ore from Kasia will significantly boost JSPL's raw material security, especially as the company makes steady progress on its plans to raise its pellet capacity to 21 mtpa (from 9 mtpa now) by FY24 and steel capacity to around16mtpa (from 9.6 mtpa) by FY25

• The company is also working towards setting up a slurry pipeline between Barbil and Angul ( around 200kms), which will not only help reduce logistics costs but also lower carbon and dust emissions associated with raw material transport through road. JSPL remains committed to continually improve its energy performance with a clear goal of bringing down our carbon emissions below 2tCO2/TCS by 2030 (2 tonnes of carbon dioxide/ tonne of crude steel).

• The company has received approval to start production in one out of two mines in Australia during the quarter. The first shipment of 50,000 tonne is expected to be received in December 2021. The company indicated the cost of captive coal at Australia port is around USD 90 per tonne (current market price of Australia coking coal in market is around USD 400 per tonne).

• While coking coal prices had risen sharply during the quarter, the impact was significantly lower given the company had already booked material at lower prices for the quarter. Upward trend in coking coal (premium hard coking coal) prices have continued in October 21, rising beyond USD 400 per tonne for the first time ever. Higher coking coal prices are likely to impact margins going forward. However, incremental supply from WCL's Russel Vale mine in Australia and declining iron ore prices should help contain margin compression from rising coking coal prices.

• Jindal Power (JPL) divestment has received strong backing from the shareholders' approving the transaction in the EGM held on 3rd September 2021. The company is currently in the process of getting relevant approvals from JSPL as well as JPL lenders and expect the divestment to conclude in FY22 itself.

• During H1FY22, capex spend stood at Rs 500 crore and target is Rs 2500 crore for FY22. The company has opted for lower tax bracket at 25.2%

• Consolidated net debt has declined further to Rs 11164 crore in Q2FY22 from Rs 15227 crore in June 2021. JSPL aims to be net debt-free company in FY23.

• The company has maintained volume guidance of 8-8.5 mt for FY22 and expects volume of around 8.7 mt in FY23