Jindal Stainless Ltd:Annual Report 2023-24 Analysis

Jindal Stainless Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History: Jindal Stainless Ltd. was established in 1970 by Mr. O.P. Jindal.

Headquarters Location and Global Presence: The company’s headquarters are located in New Delhi, India. Jindal Stainless has a global presence with operations and sales networks in various countries.

Company Vision and Mission:

• Vision: To be a globally admired stainless steel manufacturer known for innovation, sustainability, and customer satisfaction.
• Mission: To continuously improve processes, develop innovative products, and contribute to a sustainable future while delivering value to stakeholders.

Key Milestones in Their Growth Journey:

• 1970: Establishment of the company.
• 1980s-1990s: Expansion of manufacturing capacity and diversification into various stainless steel grades.
• 2000s: Focused on exports and strengthening global presence.
• 2020s: Focus on sustainability, innovation, and capacity expansion through both organic and inorganic routes.

Stock Exchange Listing Details and Market Capitalization: Jindal Stainless Ltd. is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Market capitalization is dynamic and should be checked on current market data.

Recent Financial Performance Highlights:

• Reported consistent revenue growth year-on-year, driven by increased demand in domestic and export markets.
• Focused on improving operational efficiencies and reducing debt.

Management Team and Leadership Structure: The company is led by a board of directors and a senior management team including:

• Chairman: Ratan Jindal
• Managing Director: Abhyuday Jindal

Notable Awards or Recognitions: Jindal Stainless has received various awards and recognitions for its performance, sustainability efforts, and product quality.

Their Products #

Complete Product Portfolio with Categories:

• Austenitic Stainless Steel: The most widely used stainless steel, known for its excellent corrosion resistance, weldability, and formability.
• Ferritic Stainless Steel: Generally more affordable than austenitic grades, offering good corrosion resistance in specific environments.
• Martensitic Stainless Steel: Hardened through heat treatment, providing high strength and wear resistance.
• Duplex Stainless Steel: Combines the properties of austenitic and ferritic stainless steels, offering high strength and corrosion resistance.
• Specialty Stainless Steel: Includes various grades tailored for specific applications and demanding environments.

Flagship or Signature Product Lines:

• Jindal Stainless 304/304L: Popular austenitic grade for general-purpose applications.
• Jindal Stainless 316/316L: Offers enhanced corrosion resistance, especially in chloride environments.

Key Technological Innovations or Patents: Jindal Stainless holds patents and innovations related to stainless steel manufacturing processes, alloy development, and product applications.

Manufacturing Facilities and Production Capacity: The company has strategically located manufacturing facilities in India and abroad. Production capacity information is available in the company’s annual reports and investor presentations.

Quality Certifications and Standards: Jindal Stainless adheres to stringent quality certifications and standards, including:

• ISO 9001: Quality Management System
• ISO 14001: Environmental Management System
• Other industry-specific certifications based on product type and application.

Unique Selling Propositions or Technological Advantages:

• Wide product range: Offering a variety of grades, sizes, and finishes.
• Focus on sustainability: Implementing environment-friendly practices and developing sustainable steel solutions.
• Customer-centric approach: Providing customized solutions and technical support.

Recent Product Launches or R&D Initiatives: Jindal Stainless continuously invests in R&D to develop new grades, improve existing products, and explore innovative applications for stainless steel.

Primary Customers #

Target Industries and Sectors:

• Automotive
• Architecture, Building, and Construction (ABC)
• Consumer Durables
• Railways
• Process Industries (Chemicals, Pharmaceuticals, Oil & Gas)
• Food Processing
• Power
• Healthcare

Geographic Markets (Domestic vs. International): Jindal Stainless serves both domestic and international markets, with a strong presence in Asia, Europe, and North America.

Major Client Segments (agricultural, industrial, residential, etc.):

• Industrial: Infrastructure projects, manufacturing facilities, and process industries.
• Residential and Commercial: Construction projects, appliances, and consumer goods.
• Infrastructure: Railways, transportation, and public utilities.

Distribution Network and Sales Channels: The company has a well-established distribution network comprising dealers, distributors, and stockists. They also have a direct sales team catering to large industrial customers.

Major Competitors #

Direct Competitors in India and Globally:

• India: SAIL, Tata Steel
• Globally: Aperam, Acerinox, Outokumpu

Comparative Market Share Analysis: Market share data is dynamic and available through industry reports and financial analysis platforms.

Competitive Advantages and Disadvantages:

• Advantages: Established brand reputation, wide product range, strong distribution network.
• Disadvantages: Subject to global economic cycles and raw material price volatility.

How They Differentiate from Competitors:

• Focus on specialty steel grades and customized solutions.
• Emphasis on sustainability and environmental responsibility.
• Strong customer relationships and technical support.

Industry Challenges and Opportunities:

• Challenges: Raw material price volatility, increasing competition, trade barriers.
• Opportunities: Growing demand from infrastructure development, increasing adoption of stainless steel in various applications, focus on sustainable solutions.

Market Positioning Strategy: Jindal Stainless positions itself as a leading and reliable stainless steel manufacturer, offering a comprehensive range of products and solutions with a focus on quality, innovation, and sustainability.

Future Outlook #

Expansion Plans or Growth Strategy:

• Capacity expansion through both organic and inorganic routes
• Focus on high-value-added products and specialty steel grades
• Strengthening presence in key international markets

Upcoming Products or Innovations: Focus on developing new stainless steel grades with improved properties, such as enhanced corrosion resistance, higher strength, and better weldability.

Sustainability Initiatives or ESG Commitments:

• Reducing carbon footprint and energy consumption.
• Promoting recycling and circular economy practices.
• Adopting sustainable sourcing policies.

Industry Trends Affecting Their Business:

• Growing demand for stainless steel in infrastructure development and construction.
• Increasing adoption of stainless steel in automotive, consumer durables, and other industries.
• Focus on sustainable materials and green building practices.

Long-Term Vision and Strategic Goals: To be a globally recognized leader in the stainless steel industry, known for innovation, sustainability, and customer satisfaction. To expand capacity, strengthen market position, and drive long-term value creation for stakeholders.

Comprehensive Performance Overview #

3-Year Trend Analysis of Key Financial Metrics #

• Revenue: Consolidated revenue increased from INR 35,697.03 crore in FY23 to INR 38,562.47 crore in FY24, showing 8% year-over-year (YoY) growth.
• EBITDA: Consolidated EBITDA increased from INR 3,586.09 crore in FY23 to INR 4,704.29 crore in FY24, indicating a 31% YoY growth.
• PAT: Consolidated PAT rose from INR 2,083.83 crore in FY23 to INR 2,693.48 crore in FY24, showing a 29% YoY increase.
• Sales volume: Increased by 23% Y-o-Y, reaching 21,74,610 tonnes.
• Debt-to-Equity Ratio: Remained stable at 0.20 in both reported financial years.
• Debt to EBITDA: Decreased to 0.6x, down from 0.7x.

Business Segment Performance #

• Hisar Division: FY24 dispatches reached 737,258 MT, a 19% gain from FY23. Special Product Division dispatches achieved a record 49,414 MT.
• Jajpur Division: FY24 dispatches rose to 1.50 million MT, up from 1.14 million MT in FY23. Ferro Alloys production grew by ~17% compared to FY23. Captive Power Plant generated 1,963 million units, up from 1,737 million units in FY23.
• Vizag Division: FY24 dispatches were 28,047 MT, down from 33,182 MT in FY23.
• Mobility division: It manufactures car body parts for Indian Railway passenger coaches, metro, suburban and intercity trains. The manufacturing operations are supported by two advanced plants located at Pathredi(near Gurugram) and Chennai.

Major Strategic Initiatives and Their Progress #

• Indonesian Joint Venture: Establishment of a 1.2 MTPA stainless steel melt shop in Indonesia to secure nickel supply, increasing total melting capacity to 4.2 MTPA.
• Acquisition of Chromeni Steels Private Limited: A 0.6 MTPA cold-rolling mill in Mundra, Gujarat, was acquired to diversify product offerings.
• Jindal United Steel Limited (JUSL) Acquisition: The remaining 74% equity stake was acquired, making JUSL a wholly-owned subsidiary.
• Acquisition of Rabirun Vinimay Private Limited: making RVPL a wholly owned subsidiary of the company, entering into pipe and tube segment.
• JSL Super Steel Ltd Investment: Commitment of INR 100 crore over two years to expand capacity and enhance plant quality.
• Wind-Solar Hybrid Project: MoU with M/S Oyster for setting up Wind-Solar project, generating 100MW of renewable energy for the plant at Hisar. MoU with Renew Power for 100MW renewable energy at Jajpur facility.
• Setting up of Green Hydrogen Plant: Commenced operations of green hydrogen plant with 90NM3 of green hydrogen per hour capacity.

Risk Landscape Changes #

• A sharp increase in stainless steel imports, particularly from China, was noted.
• Advocacy for a level playing field is ongoing to support domestic manufacturers, especially MSMEs, against low-quality imports.

ESG Initiatives and Metrics #

Environmental #

• INR 700 crore earmarked for sustainability projects to reduce 1.5 million tonnes of carbon emissions annually.
• Green Hydrogen Plant: India’s first in the stainless steel sector was inaugurated at the Hisar unit, reducing 2,700 tCO2e of carbon emissions annually.
• Carbon Emission Reduction: 76,000 tCO2e of carbon emissions were reduced in FY24; 280,000 tonnes over the past three years.
• Renewable Energy: 33,890 MWh of renewable energy utilized at the Company’s plants.
• Water Recycling: 100% water recycling undertaken at all plants. Water consumption intensity decreased from 7.39 m³/tcs in FY23 to 6.41 m³/tcs in FY24.
• Recycled materials in input increased from 60% in FY23 to 72% in FY24.
• Tree Plantation: Over 35 lakh trees planted in and around operational areas.
• ESG Digital Platform: Implemented for sustainability data management.
• Strategic Partnerships: MoUs signed with M/S Oyster and Renew Power for renewable energy projects.

Social #

• CSR initiatives benefited over 85,000 people, focusing on skill development, women’s rights, healthcare, and rural development.

Governance #

• Adoption of Total Preventive Maintenance (TPM) best practices.
• Transparency and ethical business operations emphasized.

Management Outlook #

• Optimism about the Indian market, with expectations of continued strong economic activity and increased demand across key sectors.
• Strategic leveraging of domestic opportunities to strengthen market position and explore new export opportunities.
• The company is also working towards metallurgical projects with its collaboration with IIT Kharagpur.

Detailed Analysis #

Financial Position Analysis of Jindal Stainless Limited #

Balance Sheet Analysis (3-Year Comparative) #

Significant Year-over-Year Changes (>10%) #

• Non-Current Assets (FY24 vs. FY23): Increased by 34.77%, primarily due to increases in property, plant and equipment, capital work-in-progress, right of use assets, Investments, and Goodwill.
• Non-Current Assets (FY23 vs. FY22): Increased by 17.16%
• Current Assets (FY24 vs. FY23): Decreased by 9.75%, primarily due to assets held for sale of 388.92. and decreased in Trade receivables.
• Current Assets (FY23 vs. FY22): Increased by 11.48%
• Total Assets(FY24 vs FY23):Increased by 13.65%
• Total Assets(FY23 vs FY22):Increased by 13.82%
• Other Equity (FY24 vs. FY23): Increased by 20.64%, driven by Retained earnings, which were impacted by Profit and other comprehensive income.
• Other Equity (FY23 vs. FY22): Increased by 73.12%
• Total Equity (FY24 vs. FY23) Increased by 20.12%
• Total Equity (FY23 vs. FY22) Increased by 74.42%
• Non-Current Liabilities (FY24 vs. FY23): Increased by 39.08%, primarily due to an increase in borrowings.
• Non-Current Liabilities (FY23 vs. FY22): Increased by 16.23%
• Current Liabilities (FY24 vs. FY23): Decreased by 4.81% .
• Current Liabilities (FY23 vs. FY22): Decreased by 18.63%.
• Total Liabilities (FY24 vs. FY23): Increased by 8.55%.
• Total Liabilities (FY23 vs. FY22): Decreased by 10.70%.

Working Capital Trends #

• Net Working Capital decreased, primarily due to reduced current assets and Current Liabilities.

Asset Quality Metrics #

• No impairment was done in the assets.
• No defaults were reported in repayments of principal or interest on borrowings.
• No significant indicators of financial distress or substantial doubt about the Group’s ability to continue as a going concern were identified.

Debt Structure and Maturity Profile #

• Maturity Profile: Detailed repayment schedules for various loans and debentures are provided in Note 17 of the consolidated financial statements, with repayments structured over multiple installments.
• The Group’s debt primarily consists of secured and unsecured term loans, debentures, and working capital facilities.

Off-Balance Sheet Items #

• Operating lease and rent expenses are recognized for short-term and low-value leases.
• Contingent Liabilities: INR 511.67 crores as of March 31, 2024, primarily related to tax and legal disputes, and INR 477.21 crores as of March 31,2023.
• Commitments: INR 515.65 crores for financial support/capital infusion in associate and subsidiaries as of March 31, 2024, and INR 1,127.12 crores for capital account contracts.

Operating Performance of Jindal Stainless Limited - FY24 Analysis #

Revenue Breakdown #

Segment Revenue #

• Segment: Stainless steel products (sole operating segment).

Geographic Revenue (Standalone) #

• Domestic Revenue FY24: INR 38,356.00 crore, 8% YoY growth.

Geographic Revenue (Consolidated) #

• Total Consolidated Revenue FY24: INR 38,562.47 crore, 8% YoY growth.
• Export Revenue FY24: INR 6,856.27 Crore (growth rate not specified).
• India vs International operations FY24 : JSL, Hisar 34000 saplings and JSL, Jajpur 33,890 Mwh .

Product Dispatchment #

• Jajpur FY24: 1.50 million MT, up from 1.14 million MT in FY23.
• Hisar FY24: 737,258 MT, up by 19%.

Cost Structure Analysis (Standalone) #

• Cost of Materials Consumed: INR 25,770.00 crore (67.18% of total revenue).
• Employee Benefit Expenses: INR 541.00 crore (1.41% of total revenue).
• Finance Costs: INR 393.36 crore (1.03% of total revenue).
• Other Expenses: INR 7,180.86 crores.
• Power and Fuel: INR 2,109.29 crore (major expense).

Margin Analysis (Standalone) #

• EBITDA Margin: 10.5% in FY24 (up from 10.2% in FY23).
• PAT Margin: 6.60% in FY24 (up from 5.7% in FY23).

Non-Recurring Items (Standalone) #

• Exceptional Items: Gain of INR 31.24 crore in FY24.

EPS Analysis (Standalone) #

• Basic EPS: INR 30.73 for FY24 (up from INR 24.46 in FY23).
• Diluted EPS: INR 30.72 for FY24 (up from INR 24.46 in FY23).

Cash Management #

Cash Flow and Liquidity Analysis #

OCF, ICF, FCF Components (Consolidated) #

• OCF: For the year ended March 31, 2024, the Group generated INR 4,818.13 crores of cash from operating activities, an increase of 55.63% compared to the same period last year. Post working capital changes, cash flow from operating activities stood at INR 5,555.38 crores, a 44.45% increase in growth.
• ICF: Net cash used in investing activities was INR 3,340.16 crores for the year ended March 31, 2024.
• FCF: Not directly calculable from the provided data, as it requires capital expenditure sub-categorization.

Working Capital Management Efficiency #

• Debtors Turnover: The debtors’ turnover ratio for the year ended March 31, 2024, increased to 11.3 from 9.1 in the previous year for standalone financial statement.
• Inventory Turnover: The inventory turnover ratio remained consistent at 3.5 for both years for standalone financial statement.

Dividend and Share Buyback Trends #

• Dividends:
  • A final dividend of INR 2.00 per equity share (100%) was recommended for FY24.
  • An interim dividend of INR 1.00 per equity share (50%) was declared and paid in FY24.
  • Total Dividend Payout for FY24 stands at 150% per share.
  • Total dividend paid was INR 288.20 crores for FY24, up from nil during the previous year.
• Share Buyback: No share buyback activity is reported in the provided document.

Debt Service Coverage #

• Interest Coverage Ratio: 11.2 for FY24, a decrease from 12.5 in FY23 for the standalone financials.
• Detailed cash flow data related to specific debt obligations are not provided, making a full debt service coverage ratio (DSCR) calculation not feasible.

Liquidity Position and Cash Conversion Cycle #

• Current Ratio: 1.38 for FY24, constant compared to the previous year in standalone financials.
• Cash and Cash Equivalents: Increased to INR 1,229.70 crores as of March 31, 2024, from INR 469.91 crores as of March 31, 2023, showing a substantial improvement in readily available cash resources in the consolidated financials.
• Cash Conversion Cycle: Not directly calculable from the provided data.

Free Cash Flow Yield Trends #

• FCF Yield: Not directly calculable, as FCF is unavailable from provided information.

Risk Framework #

Comprehensive Risk Assessment #

Strategic Risks #

• Severity: High, due to the potential impact on long-term growth and market position, especially given the joint ventures and acquisitions.
• Likelihood: Medium, considering the volatility of raw material prices (nickel) and increasing competition from imports.
• Trend: Increasing, with the company making significant strategic investments, like the joint venture in Indonesia and stake acquisitions.
• Mitigation Strategies: Backward integration (Indonesia NPI smelter), downstream capacity expansion, product diversification (long products, pipes and tubes), acquisition of Chromeni Steels Private Limited for wider market reach.
• Control Effectiveness: Partially effective. Backward integration mitigates raw material risk, but import competition remains a challenge.
• Potential Financial Impact: Substantial investments made (over INR 700 crore in Indonesia, INR 1,900 crore for downstream expansion in Jajpur, INR 1,450 crore for infrastructure upgrades, INR 1,340 in Chromeni Steels Private Limited). Failure of these strategies can lead to lowered returns.

Operational Risks #

• Severity: Medium to High, as disruptions can affect production volume and delivery.
• Likelihood: Medium, due to reliance on complex supply chains and potential for equipment failures.
• Trend: Stable, with a slight increase with the aquisition of Jindal United Steel.
• Mitigation Strategies: World Class Manufacturing (WCM) pillars, implementation of Production Planning and Detailed Scheduling & Manufacturing solutions integrated with ERP, focus on digitization (IoT, analytics, AI/ML) and Industry 4.0 principles for operational efficiency and ‘smart plant’ initiatives. Regular maintance to reduce downtime.
• Control Effectiveness: Partially effective. Digital transformation initiatives are in progress, but operational risks at manufacturing facilities remain.
• Potential Financial Impact: Process re-con/uniFB01guration in reheating furnace and oxygen enrichment at Hisar and Jajpur Plants.

Financial Risks #

• Severity: Medium, considering the debt levels and market volatility.
• Likelihood: Medium, as the company has significant borrowings and is exposed to interest rate and currency fluctuations.
• Trend: Stable, with leverage ratios well managed, however there is an increase in the Debt Equity ratio in FY 23-24, as reported in the management discussion and analysis.
• Mitigation Strategies: Prudent capital allocation, debt reduction strategies, hedging of foreign currency exposures, and maintaining a flexible capital structure.
• Control Effectiveness: Effective. Credit rating upgrades to ‘AA stable’ by CRISIL, India Ratings, and CARE indicate strong financial risk management. Net debt-to-EBITDA ratio is 0.6x and net debt-to-equity ratio is 0.2x.
• Potential Financial Impact: Sensitivity analysis shows potential impact from interest rate and exchange rate fluctuations.

Compliance/Regulatory Risks #

• Severity: Medium, depending on changes in environmental regulations and trade policies.
• Likelihood: Low to Medium, as the company operates within established regulatory frameworks.
• Trend: Potentially increasing, with stricter environmental regulations and potential trade policy changes (e.g., CBAM).
• Mitigation Strategies: Compliance with environmental standards, engagement with regulatory bodies, and advocacy for fair trade practices.
• Control Effectiveness: Generally effective, with comprehensive management systems in place (ISO 9001:2015, ISO 14001:2015, ISO 45001:2018, ISO 50001:2018, EN 9100:2018/AS9100D).
• Potential Financial Impact: Costs associated with compliance; fines/penalties for non-compliance are not material as of this year’s end.

Emerging Risks #

• Issue: Corrosion Awareness
• Severity: Medium. It presents a safety hazard.
• Likelihood: High
• Trend: Increasing as the awareness on the issue is rising and the Indian economy is growing.
• Mitigation Strategies: Creating awareness of the benefits of stainless steel, upskilling youth, and devloping stong industry-acadmeia partnerships. Flagship program, Stainless Academy, used to educate youth.
• Control Effectiveness: Positive as there is a growth and awareness, and acknowledgment of the stainless steel category.
• Potential Financial Impact: 25% of $100 billion, which can be reinvested into infrastructure development, and can reduce safety hazards.

Strategic and Management Analysis #

Long-Term Strategic Goals and Progress #

• The Company aims to achieve Net Zero carbon emissions by 2050, with a midterm target of 50% carbon emission reduction well before 2035, investing INR 700 crore in sustainability projects.
• A strategic goal is to increase melting capacity to 4.2 MTPA, with a 1.2 MTPA stainless steel melt shop being established in Indonesia.
• The Company has allocated approximately INR 1,900 crore for expanding downstream lines and INR 1,450 crore for infrastructure upgrades, supporting capacity increases.
• Entering of new segments like pipe and tubes via acquisition of Rabirun Vinimay Private Limited.
• Aim is for long products in the infrastructure sector to grow to represent 15-20% within 2-3 years.

Competitive Advantages and Market Positioning #

• Jindal Stainless is positioned as India’s foremost stainless steel manufacturer.
• The company has integrated operations, enhancing cost competitiveness and operational efficiency.
• Extensive product portfolio includes a wide variety of stainless steel products, catering to diverse sectors.
• The Company is first private entity in the country selected to lead pilot project of Make in India brand initiative.
• The Company is spearheading the fight against counterfeit stainless steel plaguing the sector.
• Developing C276 clad plates and GR 91 plates.
• Global presence across 12 countries with 16 manufacturing and processing facilities.
• Credit rating upgrades to AA stable by CRISIL, India Ratings, and CARE, indicating a strong financial position.

Innovation Initiatives and R&D Effectiveness #

• Development of special, high-strength alloy steel for Chandrayaan-3’s motor casing, showcasing R&D capabilities in high-end applications.
• Partnerships with IIT Bombay and IIT Kharagpur for research in industrial processes, product technologies, and metallurgical projects, indicating a focus on long-term innovation.
• Development of Supersonic Missile-Assisted Release of Torpedo (SMART) system’s 3 mm special alloy steel sheets.
• Focus on import substitution by developing clad plates and alloy steel plates and partnering with BHEL on this.
• Ongoing development of new products for self reliance in defence grade and automotive industry.

M&A Strategy and Execution #

• Acquisition of Chromeni Steels Private Limited to diversify product offerings and enter the value-added segment.
• Acquisition of remaining 74% equity stake in Jindal United Steel Limited (JUSL), achieving full ownership and enhancing synergies.
• Acquisition of Rabirun Vinimay Private Limited for entry into the pipe and tubes segment.
• Strategic investment in a Nickel Pig Iron (NPI) smelter facility in Indonesia (49% stake) to secure long-term nickel availability.
• Divestment of a 4.87% stake in Jindal Coke Limited, with plans to divest entire stake, indicating a shift in strategic focus.
• Acquisition of additional 30% stake in Iberjindal S.L., increasing its holding to 95%, reflecting focus on the European Market.

Management’s Track Record in Execution #

• Successful execution of multiple strategic acquisitions and investments, indicating effective strategic planning and implementation.
• Consistent delivery of high-performance stainless steel products, as evidenced by product applications in landmark projects like Chandrayaan-3.
• Successful implementation of the ‘Make in India’ branding initiative, demonstrating management’s ability to lead national projects.

Capital Allocation Strategy #

• Significant investment (INR 700 crore) in sustainability projects for carbon emission reduction.
• Joint Venture in Indonesia for a 1.2 MTPA stainless steel melt shop, with over INR 700 crore investment.
• Allocation of INR 1,900 crore for expansion of downstream lines and INR 1,450 crore for infrastructure upgrades.
• Investment of INR 100 crore over the next 2 years towards expansion and upgradation in Rathi super steel.
• Strategic investments in renewable energy projects, including wind-solar hybrid projects and rooftop solar plants.
• Prudent capital allocation strategy as evidenced by credit rating upgrades.
• Consistent dividend payouts, including a total dividend payout of 150% per share for FY24.

Organizational Changes and Their Impact #

• Making JUSL a 100% owned subsidiary is aimed at enhancing synergies and improving governance structure.
• Creating of a position of CEO, appointment of Mr. Tarun Kumar Khulbe as the CEO.

Environmental Metrics and Targets #

• Achieved a reduction of 76,000 tCO2e in FY24, with a cumulative reduction of 280,000 tonnes over the past three years. Aim to achieve a 50% reduction in carbon emissions before 2035.
• Commenced India’s first green hydrogen plant in the stainless steel sector, projected to reduce carbon emissions by 2,700 tCO2e annually.
• Generated approximately 1.9 billion units of clean energy annually through various renewable energy projects.
• Decreased water consumption intensity from 7.39 m³/tcs in FY23 to 6.41 m³/tcs in FY24. 100% water recycling is undertaken at all plants.
• Increased utilization of recycled materials in input from 60% in FY23 to 72% in FY24.
• Planted over 35 lakh trees in and around operational areas. 34000+ saplings were planted in and around the plant locations.
• Earmarked INR 700 crore for sustainability projects aimed at reducing 1.5 million tonnes of carbon emissions annually.
• Signed MoU with M/S oyster for Wind-Solar Hybrid Renewable project set to generate 100 MW of renewable energy at Hisar.
• Signed a MoU with Renew Power for a 100 MW round-the-clock renewable energy supply at their Jajpur facility.

Social Responsibility Programs #

• CSR initiatives benefited over 85,000 people in FY24.
• Over 10,500 girls and women were impacted through skill development and women empowerment programs.
• More than 25,000 people were reached through community health initiatives.
• Over 13,000 individuals were impacted by community development and livelihood programs.
• Assisted over 5,000 farmers in adopting improved production practices and strengthening market linkages.
• Initiatives impacted over 7000 women and girls, promoting menstrual health awareness and reducing stigma.
• Reached more than 4300 women, offering economic opportunities and financial independence.
• Impacted 2000 children by engaging ‘Education Through Sports’

Governance Structure and Effectiveness #

• The Board consists of 12 directors, with a balance of executive, non-executive, and independent directors, including three independent women directors.
• Audit Committee Chaired by an independent director, with members including a nominee director from the State Bank of India, ensuring independent oversight.
• Risk Management Committee Includes the Managing Director, CEO, and independent directors, indicating a comprehensive approach to risk oversight.
• ESG Committee Chaired by an independent director and includes key executives, reflecting a commitment to ESG principles at the highest level.
• Adherence to Total Preventive Maintenance (TPM) best practices, transparent, ethical, and responsible business operations.
• All three credit agencies - CRISIL, India Ratings and CARE- have upgraded the credit rating to AA stable.

Sustainability Investments and ROI #

• Green Hydrogen Plant generates 90 NM3 of green hydrogen per hour.
• Commissioned Odisha’s first 7.3 MWp floating solar power plant at the Jajpur unit and a 6.54 MWp rooftop solar plant at the Hisar unit, generating over 1,179.8 million units (kWh) of clean electricity.
• MoU signed with M/S Oyster for a 100 MW renewable energy project at Hisar, expected to abate approximately 435,372 tCO2e of carbon emissions.
• MoUs signed with Renew Power for a total of 200 MW round-the-clock renewable energy supply at the Jajpur facility, expected to reduce CO2 emissions by over 800,000 tonnes annually.

Regulatory Compliance and Future Preparations #

• The Company Secretary confirmed compliance with all applicable SEBI Regulations, Circulars, and Guidelines.
• Adhering to MCA Circulars and SEBI Circulars regarding holding AGM through VC/OAVM.
• Addressed the implementation of audit trail features in accounting software as per regulatory requirements.
• Among the chosen few globally to get certified with an AS 9100D Certification
• All testing laboratories are NABL accredited as per laboratory management system ISO/IEC 17025:2017.
• Certified as per Construction Product Regulation.

Future Outlook: Jindal Stainless Limited Analysis #

Management Guidance and Assumptions #

• Management aims for Net Zero carbon emissions by 2050, with a midterm target of 50% carbon emission reduction before 2035, demonstrating a clear focus on decarbonization.
• Management anticipates continued strong demand in the domestic market, driven by economic activity and key sectors.
• Management considers the increasing adoption of the “Make in India,” “Atmanirbhar,” and “Viksit Bharat” government initiatives.
• The Company continues to fight the ‘war against corrosion,’ with their collaboration with CII on the National Mission on Corrosion Management.

Market Growth Forecasts #

• Global stainless steel melt shop production increased by 4.6% Y-o-Y in 2023, with projections of 4.4% growth in 2024.
• India’s stainless steel consumption is projected to grow at a CAGR of 7-7.5% by FY30.
• Per capita, consumption of stainless steel is expected to go up between fiscal years 2030 and 2047.
• The demand is projected to rise 20 MT by 2047.
• India’s stainless steel consumption in FY23 increased by nearly 10%, with per capita consumption rising to 2.8 kg.
• The ART sector’s contribution to India’s GDP exceeds 10%.
• The Indian automobile sector experienced total domestic sales increase of 12.49%, and production increase of 9.62% in FY24.
• In FY23, the Union Budget announced the development and manufacturing of four hundred next-generation Vande Bharat trains.
• Demand for stainless steel is increasing in automobile exhaust systems, railway wagons, passenger coaches, metro, and urban rail transit projects.
• The Indian ABC sector has an increasing demand for stainless steel.

Planned Strategic Initiatives #

• Establishment of a 1.2 MTPA stainless steel melt shop in Indonesia, increasing total capacity to 4.2 MTPA.
• Investment of approximately INR 1,900 crore in downstream line expansion in Jajpur, Odisha.
• Allocation of INR 1,450 crore for infrastructure upgrades, including railway siding, sustainability projects, and renewable energy generation.
• Acquisition of Chromeni Steels Private Limited (CSPL) to expand into the cold-rolling market, with aims of enhancing operational efficiency.
• Acquisition of remaining 74% equity stake in Jindal United Steel Limited (JUSL), making it a wholly-owned subsidiary.
• Acquisition of 49% equity interest in PT Cosan Metal Industry, Indonesia, to secure nickel supply.
• Investment in Rabirun Vinimay Private Limited to diversify into the pipe and tube segment.
• Collaboration with ReNew Power for a 100 MW wind-solar hybrid renewable project.
• Collaboration with JBM Auto Ltd to make over 500 stainless steel electric buses.
• Partnership with IIT Bombay to establish a Chair Professorship to advance research in industrial processes and product technologies within the stainless steel sector.
• Expansion of ‘Stainless Academy’.
• Continue advocating for a level playing field that supports manufactures to thrive regardless of the scale of operations.

Capital Expenditure Plans #

• INR 700 crore allocated for sustainability projects targeting an annual reduction of 1.5 million tonnes of carbon emissions.
• INR 715 Crores collaboration agreement for a joint venture in Indonesia to invest in, construct, and operate a stainless steel melt shop.
• INR 3,350 crores for downstream capacity expansion and infrastructural upgrades at Jajpur.
• INR 1,340 crores, for an acquisition of 54% stake in Chromeni Steels Private Limited (CSPL).

Efficiency Improvement Targets #

• Targeting a 50% reduction in carbon emissions well before the 2035 target year.
• 72% of input materials are recycled.
• Aim to improve capacity utilization and on-time, in-full (OTIF) delivery to customers by the implementation of best-in-class Production Planning and Detailed Scheduling & Manufacturing solutions.
• Enhancement of operational efficiency and customer satisfaction through improved production sequences and minimized line changeovers.
• Increased operational efficiencies and resource utilization through the consolidation of facilities.

Potential Challenges and Opportunities #

Challenges #

• Volatility in raw material prices, particularly nickel and ferrochrome.
• Geopolitical tensions, notably in the Red Sea region, increasing shipping costs.
• Increased stainless steel imports, especially low-quality products from China.
• Dumping of substandard and subsidized imports by China, impacting MSMEs.

Opportunities #

• The company is among the few globally to be certified with an AS9100D Certification.
• Growing demand for stainless steel in emerging sectors: green and blue economies, aerospace, defense, infrastructure, renewable energy.
• Low per capita stainless steel consumption in India (2.8 kg) compared to the global average (~6 kg), indicating significant untapped market potential.
• The growth of the country into a $40 trillion economy by 2047.
• Government initiatives like ‘Make in India’ and infrastructure development projects boosting demand.
• Increasing adoption of stainless steel in automotive, railways, transport, architecture, building, and construction sectors.
• Expansion opportunities through strategic acquisitions and joint ventures.
• Increased global demand, strengthening international presence.
• Potential for import substitution with the development of clad plates and alloy steel plates.

Scenario and Sensitivity Analysis #

• Scenario Analysis: Implicit in planned responses to market conditions.
• Sensitivity Analysis: Focuses on the impact of price volatility on key raw materials (nickel, ferrochrome) and currency fluctuations. Strategies like strategic sourcing and hedging are employed. Analysis of key assumptions (such as discount rates) related to goodwill impairment indicates a low likelihood of impairment based on reasonably possible changes. The analysis of the change in discount rates for the calculation of the Net Present Value of the defined benefit plan and the sensitivity analysis.

Audit and Compliance Analysis #

Auditor’s Opinion and Qualifications #

• The auditors issued an unmodified opinion on the standalone and consolidated financial statements.
• The auditors noted that for companies covered under the Act, the audit trail feature of accounting software was operated throughout the year for all relevant transactions, except that this feature was not enabled at database level for such accounting software to log any direct data changes which is maintained by a third party software provider.

Key Accounting Policies and Changes #

• The Company’s accounting policies are as per Ind AS.
• The Company’s and Group’s policies are consistently applied across periods.
• There have been no changes in the accounting policies that had any material impact on the Standalone and Consolidated Financials.

Internal Control Effectiveness #

• The auditors expressed an unmodified opinion on the adequacy and operating effectiveness of the Holding Company’s internal financial controls over financial reporting.
• The Group has an internal audit system. Findings are reported to the audit committee.

Regulatory Compliance Status #

• The Company complied with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
• The Company paid a fine of INR 2.80 lakh to NSE for alleged delay in compliance with a regulation.
• The Company declared that no application had been admitted against the Company under the Insolvency and Bankruptcy Code, 2016
• The Group, in respect of FY 2023-24, has used an accounting software having a feature of recording audit trail facility. However the audit trail feature was not enabled at database level for the accounting software used.

Legal Proceedings and Their Potential Impact #

• There are pending litigations disclosed under Note 42 to the standalone financial statements, impacting the Company’s financial position.
• As reported, there were no significant and material orders impacting the going concern status.
• One subsidiary (Green Delhi BQS Limited) is involved in an ongoing legal dispute with the Delhi Transport Corporation (DTC) over a concessionaire agreement.
• The Company also filed a writ petition before Hon’ble High Court of Punjab and Haryana against the applicability of LADT/Entry tax, granted interim relief by order for stay of demand on May 31, 2017.
• The subsidiary Company, JSL Lifestyle Limited, has filed a writ petition before Hon’ble High Court, Punjab and Haryana against show cause notice received under IGST Act, 2017. The petition is pending before the Hon’ble High Court.

Related Party Transactions #

• All related party transactions during the year were conducted at arm’s length.
• The Company obtained prior approval from the Audit Committee for related party transactions.
• Material related party transactions during FY 2024-25 were approved by shareholders.
• The Company acquired the remaining 74% stake in Jindal United Steel Limited (JUSL), making it a wholly-owned subsidiary.
• The company sold the remaining 21.13% equity stake held in Jindal Coke Limited during the year.

Subsequent Events #

• The Board of Directors of the Company, at its meeting held on 01 May 2024, granted approval:
  • for setting up of joint venture in Indonesia for stainless steel melt shop.
  • for an investment of up to INR 3,350 crores towards downstream capacity expansion and upgrading infrastructural facilities.
  • for an acquisition of 54% stake in Chromeni Steels Private Limited.
• The Company acquired a further 30% stake in Iberjindal S.L., increasing its total stake to 95%.
• The Board of Directors recommended a final dividend of INR 2.00 per equity share.
• The Nomination and Remuneration Committee granted additional stock options to eligible employees.

Analysis of Accounting Quality #

• Transparency: The financial statements comply with Ind AS and provide detailed disclosures, contributing to transparency. The note on related-party transactions (point 48) enhances this transparency.
• Consistency: Accounting policies are reported to be consistently applied.
• Materiality: The report discusses materiality in the context of revenue recognition and related party disclosures, indicating an appropriate assessment of material information.
• Compliance with Laws and Regulations: JSL’s actions, such as paying the NSE fine despite disagreement and taking measures to comply, shows its willingness to follow set guidelines for corporate behavior.
• Audit trail feature: Audit trail feature not enabled at database level is a potential risk.

Regulatory Risk Assessment #

• Pending Litigations: The disclosed contingent liabilities and ongoing litigations, especially those related to taxes and regulatory compliance, pose a risk.
• SEBI Compliance: While the Company has generally complied with SEBI regulations, the fine paid to NSE highlights a minor compliance lapse.
• Industry-Specific Risks: The Company operates in a sector with inherent risks, such as price volatility of raw materials. Additionally, compliance with environmental regulations (and related disclosures) is important to the operations of the company.