Jindal Steel & Power : FINANCIAL RESULTS FOR FOURTH QUARTER & FINANCIAL YEAR 2015-16

32a7df40-4047-46aa-925f-768e6e936a74.pdf

PRESS R ELEASE

FIN ANCIAL RESUL TS FOR FOU RTH QUAR T E R & F I NANCI AL YEAR 2015-­‐ 16

JSPL Hits Record Production & Sales; Profitability improves

• JSPL Standalone EBITDA up 59% QoQ

• JSPL Consolidated EBITDA up 63% QoQ

• Pellet sales in 4QFY16 four times YoY

• Oman 1.4 MT rebar mill commissioned

  Crude Steel Production: 0.97 million tonnes 24% QoQ

  Steel Sales: 1.0 million tonnes 37% QoQ

  Turnover:

  Rs. 3,462 Cr 18% QoQ

  Operating EBITDA: Rs. 673 Cr (EBITDA margin 19%) 59% QoQ

• 1.2 MTPA Plate mill in Raigarh upgraded

JSPL Standalone 4QFY16 Performance:









JSPL Consolidated 4QFY16 Performance:

 Crude Steel Production: 1.3 million tonnes 24% QoQ

 Steel Sales: 1.4 million tonnes 44% QoQ

 Turnover: Rs. 4,874 Cr 12% QoQ

 Operating EBITDA: Rs. 896 Cr (EBITDA margin 18%) 63% QoQ

1. Steel - Standalone and Consolidated

   The quarter ending March 31' 2016 saw good recovery of steel prices in the domestic market, which for the past 18 months had slumped to an all time low. Introduction of MIP in the first week of February'16 also helped to curb the rapidly growing imports at predatory prices.

   JSPL implemented new organization structure consisting of 17 Strategic Business Unit (SBUs), each mandated to function as independent Profit & Loss centre. The new focused organization and commissioning of upgraded plate mill in Raigarh saw JSPL Steel Sales exceed One Million mark in domestic as well as consolidated volumes.

   During the quarter ended March'16, our steel sales in JSPL Standalone stood at 1.0 MT (up 37%

   JSPL -­‐ Financial Results 4Q & FY16 1

   since last quarter) while our domestic steel production stood at 0.97MT (vs. 0.78MT in 3QFY16). Sales were at 0.78MT and production at 0.88MT last year during the same period.

   JSPL Standalone Steel Sales for FY16 stood at 3.3MT up 15% YoY (2.9MT in FY14-­‐15) while Production reached a new high of 3.5MT up 10% YoY (3.2MT in FY14-­‐15). The Consolidated Steel Sales for FY15-­‐16 climbed to 4.4MT up 30% YoY (3.4MT in FY14-­‐15) while Production stood at 4.5MT up 24% YoY (3.7MT in FY14-­‐15). Pellet production in 4QFY16 increased 108% YoY while external sales volume of pellets more than Quadrupled since last year.

   Standalone turnover of JSPL in 4QFY16 was Rs. 3,462 Cr compared to Rs. 2,944 Cr in 3QFY16 (a rise of 18% q-­‐o-­‐q) on account of higher sales volumes, muted by lower average realizations. JSPL standalone EBITDA in 4QFY16 is at Rs.673 Cr vs Rs. 423 Cr in 3QFY16.

   The higher revenues in our Standalone operations also pushed up our Consolidated turnover in 4QFY16, which stood at Rs. 4,874 Cr, compared to Rs. 4,362 Cr in 3QFY16 (up 12% QoQ). On back of higher sales and ongoing cost reductions, JSPL Consolidated EBITDA in 4QFY16 grew to Rs. 896 Cr, up 63% over last quarter.

   During this quarter, apart from numerous accolades & appreciations for quality of its products, JSPL also bagged the order to supply steel for the World's Highest Bridge (359 mts above MSL) across River Chenab in Jammu & Kashmir and a new order for supply of 105,000 MT from GMR for the DFCC contract.

   JSPL is confident of increasing its Steel Production and Sales volumes with each consecutive quarter going forward, in the endeavor to fully sweat its assets.

2. Jindal Power Ltd (JPL)

   During the fourth quarter, power demand and merchant rates continued to remain weak similar to previous quarter. JPL generated 2,358 MU in 4QFY16 as compared to 2,580 MU in 3QFY16 (down by 9% QoQ).

   Due to lower generation & lower realizations in 4QFY16, the Turnover was lower than 3QFY16

   JSPL -­‐ Financial Results 4Q & FY16 2

   by 14% and EBITDA margins also got impacted.

   Due to declining PLFs in FY16 compared to FY15, JPL turnover fell to Rs. 3,015 Cr vs. Rs.3,228 Cr in FY15.

   The company is investing in ways to increase the capacity utilization as also to decrease the costs and thus improve JPL margins.

3. Global Ventures

   The Global Ventures vertical consists mostly of mines & minerals business in Australia, Mozambique and South Africa , and an Integrated Steel plant at Oman. Beginning of FY15-­‐ 16, with the downturn in the Global commodity cycle, JSPL undertook a massive cost reduction program across all its global sites which continued through 4QFY16.

   Supported by these efforts, in the concluded March'16 quarter, the Global Ventures cumulatively have been able to improve EBITDA margins significantly as compared to the previous quarter.
4. Oman: Jindal Shadeed continued to ramp up its production, with crude steel production in 4QFY16 increasing by 22% compared to the previous quarter. With increasing global steel prices and increase in production volumes. Jindal Shadeed operations generated an EBITDA of Rs. 95 Cr as compared to Rs. 54 Cr last quarter. The 1.4 MTPA rebar was also commissioned end of March'16 and is expected to start commercial production this quarter.
5. Wollongong Coal Limited, Australia: Our Australian operations remained under care

   & maintenance in 4QFY16, both at Russell Vale & Wongawilli. The company is planning to recommence mining operations at Wongawilli in 1QFY17.

6. South Africa : FY15-­‐16 marked a turnaround in our South Africa operations with EBITDA turning positive from an EBITDA loss in FY14-­‐15. Further ramp up in production will further increase the operating profits in FY17.

   JSPL -­‐ Financial Results 4Q & FY16 3

7. Mozambique : In view of the subdued coal prices globally, to curtail losses in Mozambique operations, the company has decided to substantially scale down its operations in 4QFY16 and thus has successfully reduced EBITDA losses.
8. Key Initiatives : -­‐
1. Angul Operations - The ramp-­‐up in Angul operations is steadily progressing with CGP clocking the highest annual production of Syn Gas in FY16. During the fourth quarter of the just concluded financial year, Angul plant doubled its production over previous year to produce 0.9MT of crude steel. The 1.4MTPA rebar mill is in final stages of completion and would be commissioned in the first half of this year.
2. Panther TMT Rebars -­‐ TMT rebar sales in 4QFY16 under the brand "Panther" grew by 38% over 3QFY16 and crossed 0.27MT mark in 4QFY16.
3. Machinery Division - JSPL's machinery division at Raipur has gradually created a niche for itself in building heavy machinery for industrial clientage. In FY15-­‐16, the machinery division produced machinery for both domestic consumers and even exported equipment to countries including Argentina, Bangladesh, United States, UAE & Oman. The division has also secured export orders for pressure vessels from Dangote, Nigeria.
4. Construction & Solutions Business - JSPL's Construction & Solutions Business continues to grow the fastest among the Strategic Business Units. Apart from bagging new projects across India, the unit has already begun completing & delivering projects taken up in previous couple of quarters. The segment is working on projects in the Commercial & Residential Real Estate, Sports, Transportation & Aviation infrastructure space.
5. Logistics - With the aim to optimize costs, bring operational efficiency and generate additional earnings, the company has carved out its logistics business into a separate subsidiary named "Panther Transfreight". The new subsidiary has been entrusted with the task of achieving operational excellence in JSPL's inbound and outbound logistics.

JSPL -­‐ Financial Results 4Q & FY16 4