JSW Severfield India Announces Strong 2019 Result
JSSL performed strongly in 2019 and its results are now beginning to reflect the step change in the market for structural steel in India. The Indian market has continued to expand, and we are seeing clear signs of the conversion of the market from concrete to steel which will drive the success and long term value of the business. This position is evident in an order book at 1 June 2019 of GBP 134 million (1 November 2018: GBP 124 million), which now contains a stronger mix of higher margin commercial work. Significant new orders secured in the year include two large commercial projects - Sattva, in the state of Hyderabad, and Amaravati, in the state of Andhra Pradesh, together with numerous industrial projects, many of which are for our joint venture partner, JSW Steel. The expanding market position is also reflected in a pipeline which includes a growing large number of potentially interesting commercial projects for key developers and clients with whom we are now developing strong relationships. In addition, we also have visibility of an increased pipeline of industrial work, including those for JSW, which is currently expanding its domestic steel output, a process which we expect to continue for the foreseeable future.
In 2019, JSSL continued to grow and has increased its profit during the year, of which the Group's after tax share was GBP 1.2 million (2018: GBP 0.5 million). The higher profitability in the year reflects both increased revenue and good operational performance, together with lower financing costs following the repayment of the term debt in June 2017. JSSL's revenue has increased significantly to GBP 84 million compared with GBP 48 million in the previous year, driven by higher volumes of industrial work in 2019, a position which was also manifest in the higher order book coming into the financial year. This greater mix of industrial work has resulted in a reduction in the operating margin to 6.4% compared to 9.2% in 2018, however, given the greater proportion of commercial work in the current order book, we expect to see an improvement in the operating margin in the 2020 financial year and beyond.
The expansion of the Bellary facility, which will increase factory capacity from 60,000 tonnes to 90,000 tonnes, is now well underway and is expected to be completed towards the end of the 2020 financial year. During the year, JSSL has strengthened its senior management team, enhanced and expanded its subcontracting supply chain partnerships and is up skilling its workforce, bringing people with new skills into the business to support the expansion and to provide the business with the springboard to deliver future profitable growth.
It said “Overall, we remain excited about the long-term development of the market and of the business, especially considering the encouraging market developments and step up in the order book and we expect that value will continue to build in JSSL as it continues to expand and develop.”
Source : Strategic Research Institute