Essar Steel EBIDTA up 188%, PAT at Rs 648 cr, Major Projects Completed
May 25th, 2015
Highlights of FY 2015
- Gross revenues at Rs 17,162 crore, up 19.61% from Rs 14,348 crore in FY14
- EBITDA at Rs 5389.5 crore, up by 188.45% from Rs 1,868.4 crore in FY14
- PAT at Rs 648 crore against a loss of Rs 1597.14 crore in FY14
- Major projects completed and all units ready for full production
- Holding company infused additional equity of approximately Rs 1300 crore (Totaling Rs 11,000 crore)
- Monetization of Odisha slurry pipe line and oxygen plant for approx. at Rs 4850 crore
- Operating Margin doubled to 18% in FY15 compared to 9% in FY14
Mumbai: Essar Steel India Limited today announced its financial results for the year ended March 31, 2015.
Essar Steel has made significant improvements in the performance of the company during FY15. The company focused on consolidation, enriching product mix, cost reduction and stabilizing operations.
The gross revenue has increased by 19.61% to Rs 17,162 crore for the year ended March 31, 2015, as against Rs 14,348 crore in the previous financial year.
Total expenditure for FY15 is Rs 11,733 crore compared to Rs 12, 480 crore in FY14.
EBIDTA has grown by 188.45% to Rs 5,389.5 crore as against Rs 1,868.4 crore in FY14.
The finance cost at Rs 3865 crore has reduced by 7.44% compared to Rs 4176.4 crore in FY14.
The depreciation for FY15 is Rs 807.75 crore as against Rs 1067.38 crore in FY14.
The company has registered a Profit after Tax of Rs 648 crore against a loss of Rs 1597.14 crore in FY14.
Despite the negative impact of lower prices due to rising imports, the company was able to get a premium on its products over market prices. This was possible owing to company’s strategy to move away from commodity grade steel to value-added grade steel. The company also benefited from somewhat lower input prices of basic raw material.
The improvement in financial performance can be attributed to the following:
A. Improved operating margin to 18% from 9% in FY14 due to various innovations and cost cutting measures in spite of a richer product mix.
B. One time profit booked from sale of the Odisha slurry pipe line.
Commenting on the performance, Mr Firdose Vandrevala, Executive Vice Chairman, Essar Steel India, said, “Essar Steel has completed all major projects at a competitive cost. The company’s strategy to focus on value-added products, introducing new products, improved operating margins and cost saving has aided the improved performance of the company.
We have drawn up a clear road map to strengthen the balance sheet through infusion of funds, ramping up production and improve profitability to ensure sustainable operations of the company.”
During the year, all major projects have been completed and the company further strengthened its operations through a) increasing production and sales volume of value added grades b) stabilizing operation at the Odisha pellet facility c) ensuring seamless power supply to the Hazira facility.
The sales volume of steel products stood at 3.31 million tonnes, marginally up by 2% compared to 3.24 million tonnes in the previous year.
The company sold 2.76 million tonnes in the domestic market, and 0.56 million tonnes in the export market. The share value added grade of steel in total sales has increased from 50% to 62%.
During the year, the company reduced finished goods (including WIP) inventory by 50%.
During the year, the blast furnace and sinter plant operated at full capacity. The operations of DRI units were constrained by non-availability of gas at a reasonable price. This was partially made good by using gas generated in the COREX units.
Reduced availability of iron ore from Odisha, due to mining restrictions following a Supreme Court order, also affected plans to ramp up production at the steel plant. Operation of the Odisha facility has since been fully stabilized and is now on course to ramp up production.
The seamless power supply at Hazira facility has been achieved through connectivity to national power grid through a 400kv transmission line. Additionally, the 300 MW coal based power plant at Hazira is scheduled to be commissioned in Q1 FY16. This is expected to result in reduction in cost of power.
The company’s strategy of focusing on value-added products for hydrocarbon, engineering automotive and import-substitute products has helped improve profitability and to a large extent negate the impact of rising cheaper imports.
The company’s approach to align R&D efforts with customer needs has resulted in 26% of the revenue coming from products that were developed in the last three years.
With an objective to ramp up production, the company is raising need-based working capital of Rs 4000 crore. Further, the company plans to avail the 5/25 scheme of RBI to extend maturity.
Action plan to strengthen balance sheet
With dollarization of USD 2.2 billion, the company has reduced its finance cost from 12% to 9% and the maturity has been elongated.
The holding company of Essar Steel has infused an equity of approximately Rs 1300 crore and monetization of the Odisha slurry pipeline and oxygen plant for approx. at Rs 4850 crore.
In addition, the company proposes to monetize the Vizag slurry pipeline and coke oven for approximately Rs 7000 crore in the current fiscal.
The above measures will provide the company approximately Rs 12000 crore which will be utilized to strengthen the balance sheet and meet all its financial needs.
About Essar Steel
Essar Steel India is one of India’s leading integrated steel producers with an annual production capability of 10 MTPA supported by a 20 MTPA pellet facility. The state-of-the-art facilities comprise iron ore beneficiation, pellet making, iron making, steel making, and downstream facilities, including a cold rolling mill, a galvanizing and pre-coated facility, a steel-processing facility, an extra-wide plate mill and three pipe mills with coating facilities.
Essar Steel uses information technology extensively for its operation to ensure consistent quality of its products. It produces over 300 grades of steel conforming to quality standards of international certification agencies like API, ABS, NACE, Lloyd’s Register to name a few. The products cater to the requirements of a wide cross section of industries, many of which are import substitute products.
Essar Hypermart, a pioneering initiative of Essar Steel, caters to the requirements of the SME segment, which normally does not have access to mill material directly.
Sustainability has been given due importance and the company is on course to becoming a zero-waste company.
Mr B.Ganesh Pai
VP – Corporate Communications, Essar Steel
Phone: +91 98197 30225