Over the years, JSW Steel has grown to be the market leader in the Indian steel industry, with strategic international presence. Looking ahead, we have planned a capex of ~H40,000 crore over FY19 and FY21 to increase capacity to 24.7 MTPA, modernise and expand our downstream facilities and to facilitate strategic backward integration projects to achieve cost reduction. Additionally, we will pursue strategic growth across high-margin areas; further diversify our product suite and customer base; achieve full integration across our business; drive optimum resource utilisation; adopt prudent financial management; and ensure sustainability across all functions of our business.
16% ROCE; 91% Capacity Utilisation; 37 Training Hours Per Employee; 16 New Patents Filed; 61 Crore CSR Expenditure; 2.59 TCO2/TCS Specific Greenhouse Gas Emissions
JSW Steel is the flagship company of the JSW Group, a $13 billion-worth leading Indian conglomerate. It is the most efficient steel producer in India and has the ability to expand capacities at lower costs. The Company has one of the lowest conversion costs in the steel industry. s. It has a diversified workforce of 11,619 permanent employees across all its plants.
The strategic location of the Company’s facilities has provided significant logistics advantage and production capacity. The Company has also announced a $500-million expansion plan for its Plate and Pipe making steel mill in Texas, USA, to strengthen its global network. The Company have recently acquired an integrated flat steelmaking facility in the US, Acero Junction Holdings, with a potential capacity of 3 MTPA for an enterprise value of US$182 million. JSW Steel propose to invest up to US$500 million cumulatively at this location, in phases, to make it a fully integrated 3 MTPA steelmaking capacity.
New launch: JSW Everglow is a colour-coated steel product that provides beautiful and innovative roofing and wall solutions. Super premium and technologically superior, it scores high on aesthetics and is the first product in the roofing solutions category that offers colour coating on both the sides. The launch of this product is in line with JSW Steel’s strategy to boost its value-added products portfolio.
Key Projects that the Company is Currently Partnering With: Eastern dedicated freight corridor (Ludhiana-Delhi-Kolkata); Western dedicated freight corridor (Delhi-Mumbai); World one (Lodha group), Mumbai; Kannur International airport (under construction)
This was a very successful financial year that saw us report market-leading numbers, together with the triggering off of multiple strategic initiatives aimed at realising our long-term vision.
For the first time in many years, elasticity of steel demand to GDP growth exceeded 1x. Infrastructure received a big boost in the form of budgetary allocation, and consumer sentiment, too, is on the rise.
Revival in domestic demand in the second half of the year was a key catalyst of our performance and was driven by improving prospects of the auto, construction and capital goods sectors. Rising share of value added products in the overall business was another highlight of the year. These products contributed 58% to our revenues as compared to 34% in FY17 and were instrumental in boosting our realisations as well as profitability.
We have acquired a 100% stake in US based steel plant Acero junction holdings for $80.85 million (~Rs. 550 crore) recently. This acquisition will further bolster our manufacturing presence in the us market.
Large unpaid debt and increasing protectionist measures coupled with benefits of consolidation such as improved margins and stability are moving the global steel industry towards consolidation.
UNDERTAKING ONE OF THE LARGEST CAPEX PROGRAMMES IN ITS HISTORY: A Rs. 40,000 crore capacity expansion drive to achieve manufacturing capability of 24.7 MTPA and build downstream facilities by FY21.
Tunga Iron Ore Mines (Karnataka) made operational; another four iron ore mines to be made operational in FY19. Highest ever crude steel production: 16.27 MnT.
Capacity addition cost: $580 per tonne; Conversion Cost: $116 per tonne; Employee retention ratio of 95.35%
The Company’s increasing focus on value added and special products like Galvalume and customised products catering to the passenger vehicle industry led to a 14% yoy increase in their sales, ultimately reducing imports, boosting local economy and saving foreign exchange for the nation.
The Company has entered into technological collaboration with JFE Steel Corp. Japan for the manufacture of high-strength and advanced high-strength steel for the automobile sector. The Company has also signed a joint venture agreement with Marubeni-Itochu Steel Inc., Japan, to set up contemporary steel processing centres. In addition, to strengthen its global network, the Company also operates a plate and pipe making steel mill, situated at Baytown, Texas in USA.
Further, as part of its backward integration strategy and with a focus to source iron ore locally, the company has acquired five iron ore mines in Karnataka. One of these mines became operational in February 2018 and the remaining four will be operationalised in the FY 19. Collectively they will provide 4.7 MTPA of iron ore, providing about 20% of the Company’s iron ore requirements at Vijayanagar.
2017 saw an improvement in global steel consumption, which grew 4.7% to 1.59 billion tonnes in the year, after a subdued growth of 1% in 2016. A low base-effect of 2016, along with improved steel consumption in China and investment-led recovery in advanced economies were the key factors driving this momentum.
India should remove Steel from all Free Trade Agreements (FTAs) prevailing in global trade. Consequent to the concessional duty under the FTAs for Japan, Korea and ASEAN regions, there is a price disparity of ~13.75%, equivalent to ~` 6,500 per tonne or a price impact of 15% on domestic ex-mill prices. This disparity should be addressed by swift action from India. The Government of India has been proactive in addressing the issues faced by domestic steel makers. It has taken major steps to stop unfair trade and to safeguard the interests of domestic players.
JSW Steel produces flat sheet products that include slabs, hot-rolled coils, cold-rolled coils, coated products and others. Flats also remained the Company’s mainstay during the first half of the year, when demand for long products was low. Continuing the trend from previous years, flat products occupied a significant proportion of the Company’s product portfolio at 71% and registered a y-o-y sales growth of 2%. Robust demand in the automobile sector increased domestic flat sales by 11% y-o-y.
During the year, Hot Rolled Coils (HRCs) comprised 39% of the Company’s product portfolio. Domestic sales of HRCs rose 8% y-o-y primarily in Southern and Western regions of India.
Essential to the auto sector and several white goods, JSW Steel’s Cold Rolled (CR) steel products are manufactured at its state-of-the art Vijayanagar Works. CR products comprised 17% of the product portfolio in FY18. During the year, sales volume of Cold Rolled and Close Annealed (CRCA) grew 8% y-o-y with domestic growth of 20% y-o-y. CRCA sales grew 27% during the year and outpaced the growth of 15% posted by the automobile sector in India.
JSW Steel caters to the galvanised steel segment with a market share of 42%
Long products comprised 23% of the Company’s product portfolio in FY18. During the year, long product sales increased 15% y-o-y.
During the year a subsidiary of the Company has surrendered one of its iron ore mine in Chile considering its economic viability and accordingly the Company has reassessed the recoverability of the loans given to and investments made in subsidiaries and recognised an impairment provision of Rs. 234 crores which has been disclosed as an exceptional item.
With a strategic objective of augmenting the incremental capacity creation at a low specific investment cost so that they remain returns accretive, the Board of Directors of the Company has approved certain key new projects in addition to the existing capex pipeline to achieve the following: – expand overall steelmaking capacity from 18 MTPA to 24.7 MTPA by March 2020. – enrich the product mix with 3.2 MTPA additional downstream capacity. – backward integration projects to achieve cost reduction.
Post completion of two new projects, the Company’s overall crude steel making capacity will increase from 18 MTPA to 24.7 MTPA by March 2020.