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Jindal Stainless, Videsh Sanchar Nigam, Indraprastha Gas

Jindal Stainless, Videsh Sanchar Nigam, Indraprastha Gas

JINDAL STAINLESS Stainless Steel Major Jindal Stainless (JSL), a flagship company of the O P Jindal Group, was incorporated in 1970. It is India

Companias

JINDAL STAINLESS

Stainless Steel Major

J
indal Stainless (JSL), a flagship company of the O P Jindal Group, was incorporated in 1970. It is India’s largest integrated stainless steel manufacturing company. The company manufactures and sells a broad range of stainless steel products, including slabs, blooms, flat bars, hot rolled and cold rolled coils, plates and sheets. The company has two manufacturing plants in India located at Hisar (Haryana), which comprises two major operational units, namely, a hot rolling and a cold rolling division and another at Visakhapatnam. The west Asian region is emerging as an important market for the company’s steel products. Europe is also an important market for finished steel products, besides being a raw material hub. JSL sources raw material from European countries, including Russia.

During 2004-05, JSL witnessed healthy financial performance. Its net sales were augmented by 32 per cent to Rs 3,189 crore over the same period of the previous year and net profit surged by 49 per cent to Rs 245 crore. The company’s earnings in foreign exchange rose by 5 per cent to Rs 1,027 crore. For the company, the domestic market is the prime target, accounting for 64 per cent of the net sales revenue during the year under review; at the international level, China accounted for 27 per cent, other parts of Asia 8 per cent and the remaining contributed by the US, Europe and west Asian countries. During the year under review, the company increased its stainless steel melting capacity and hot rolling capacity by 50,000 tonnes each, and its cold rolling capacity by 60,000 tonnes.

The company has two subsidiaries, namely, PT Jindal Stainless, Indonesia and Jindal Stainless Steel, Italy. Recently, it has formed a wholly-owned subsidiary in London called Jindal Stainless, UK. The company is setting up yet another subsidiary at Dubai, which will be called Jindal Stainless FZE.

The growing demand from domestic as well as export markets has induced the company to set up new factories and expand capacity of the existing units. JSL is in the process of setting up an integrated stainless steel facility in Duburi, Orissa since the state has a significant availability of chrome ore, manganese and iron ore. The company is setting up a 1.5 million tonnes per annum, fully integrated stainless steel plant in Orissa to be followed by a six lakh tonne unit with an investment of around Rs 600 crore. The company is setting up two ferrochrome plants with a capacity of 75,000 tonnes per annum that will eventually provide raw material to its proposed integrated steel plant in Orissa. Currently, the company requires 80,000 tonnes per annum of ferrochrome, which is partly being sourced from its own captive plant in Visakhapatnam, with a capacity of 40,000 tonnes per annum and the rest is being outsourced.

For the nine months ended December 2005, JSL has reported a 6 per cent increase in net sales to Rs 2,373 crore over the same period of the previous year. However, due to a rise in overall expenditure, the company’s net profit declined by 16 per cent to Rs 131 crore.

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VIDESH SANCHAR NIGAM

Global Player

V
idesh Sanchar Nigam (VSNL) was established in 1986 by the government of India to take over the activities of the erstwhile Overseas Communication Services. In February 2002, VSNL was taken over by the Tata Group. Currently, the government’s share in VSNL stands at 26 per cent. The company offers a wide range of telephone/communicationrelated services, which include international telephony, leased channels, dialup internet, broadband, net telephony, enterprise data and more. The company also offers a number of other services such as TV uplinking services, transponder leasing services, etc.

Over the last three years, domestic and international call tariffs have witnessed surging competition, falling rates and lower margins. Simultaneously, the growth and deregulation of the telecom sector has opened up large new opportunities for the company to diversify and grow. During 2004-05, VSNL registered strong financial performance. Its net sales stood at Rs 3,303 crore, a rise of 4 per cent over 2003-04 and net profit reported a whopping 100 per cent increase to Rs 756 crore. The company’s earnings in foreign exchange jumped by 32 per cent to Rs 1,951 crore. Among the total sales revenue, telephony and related services contributed Rs 3,240 crore and other services revenue stood at Rs 63 crore.

During 2004-05, VSNL set up two points of presence in the US and one in the UK. It had signed interconnect agreements with all domestic cellular service provider and private basic operators for direct termination of ILD tariff. VSNL has entered into a strategic alliance with Microsoft India for launching web conferencing services in India. The company would be offering the services through Tata Indicom and they will be available in two versions, namely, standard and professional. Recently, VSNL acquired Teleglobe International Holdings, a leading provider of wholesale voice, data, internet protocol and mobile signalling services, for $ 239 million. With this acquisition, VSNL moves into the league of the global top three in international wholesale voice providers. It is the company’s second overseas acquisition after the Tyco Global Network, which was taken over in November 2004.

VSNL has been chosen as the network administrator for one of the world’s largest transcontinent cable systems called as South-East Asia-Middle East-Western Europe (SEA-ME-WE4). This is the first time that an Indian company has been chosen as the network administrator for a global consortium cable system.

For the nine months ended December 2005, VSNL posted better financial performance. The company’s net sales increased by 16 per cent to Rs 2,821 crore over the same period of the previous year and net profit rose by 3 per cent to Rs 368 crore. During the period under review, sales revenue from telephony

Economic and Political Weekly March 25, 2006

The Week’s Companies and related services went up by 17 per (Rs lakh) cent to Rs 2,782 crore. However, other services revenue declined by 20 per cent

Jindal Stainless Indraprastha Gas VSNL

to Rs 39 crore.

Financial Indicators 2004-05 2003-04 2004-05 2003-04 2004-05 2003-04

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Income/Appropriations

1 Net sales 318919

2 Value of production 331833

3 Other income 523

4 Total income 332357

Raw materials/stores and spares/

power and fuel consumed 255338

6 Other manufacturing expenses 8613

7 Remuneration to employees 4050

8 Other expenses 12902

9 Depreciation 13099

Gross profit 38355 11 Interest 2619 12 Operating profit 35737 13 Non-operating surplus/deficit 44 14 Profit before tax 35781

Tax provisions 11196 16 Profit after tax 24585 17 Dividends

(includes tax on dist profit) 2638 18 Retained profits 21947

Liabilities/assets

19 Paid-up capital 2198

Reserves and surplus 77079 21 Long-term loan 53940 22 Short-term loan 82588

(i) of which, bank borrowings 74593 23 Gross fixed assets 205318 24 Accumulated depreciation 32059

Inventories 52098 26 Total assets/liabilities 327872

Miscellaneous items 27 Excise duty 22738 28 Gross value added 56245 29 Total foreign exchange earnings 102127

Total foreign exchange outgo 105995

Key financial and performance ratios 31 Turnover ratio (sales to total assets) 1.2 32 Gross value added to gross

fixed assets (%) 31.8 33 Return on investment

(gross profit to total assets) (%) 14.0 34 Gross profit to sales

(gross margin) (%) 12.0

Operating profit to sales (%) 11.2 36 Profit before tax to sales (%) 11.2 37 Tax provisions to profit before tax (%) 31.3 38 Profit after tax to net worth

(return on equity) (%) 36.4 39 Dividend (%) 103.7

Earnings per share (Rs) 22.4 41 Book value per share (Rs) 72.1 42 P/E ratio (multiple) 5.5 43 Debt-equity ratio

(adjusted for revaluation) 1.72 44 Short-term bank borrowings

to inventories (%) 143.2

Sundry creditors to sundry

debtors (%) 56.3 46 Total remuneration to employees

to value added (%) 7.2 47 Total remunerations to employees

to value of production (%) 1.2 48 Gross fixed assets formation

(% growth) 38.5 49 Growth in inventories (%) 20.1

241261 242820 222 243042

177489 11431 3430 14325 10691 25676 2475 23201 105 23305 6886 16419

1959 14460

1998

53725

12969

65135

50367 148204 19007 43388

219515

19297 39970 97093 71599

1.3

29.3

12.8

10.6

9.6

9.7

29.5

34.6

85.5

16.4

55.8

7.5

1.4

116.1

134.7

8.6

1.4

19

35.9

45004 45012 282 45294

1613 19862 933 4120 4803 13963 348 13615 498 14113 4845 9269

2800 6469

14000 17247 0 4800 4800 50848

13381 1805 49189

7018

20021 0 0

1.1

41.2

30.2

31.0

30.3

31.4

34.3

32.9

17.2

6.6

22.3

15.0

0.15

266.0

477.0

4.7

2.1

9.9

50.7

41943 41947 113 42060

1239 18644 894 4215 4204 12864 752 12112 748 12860 4641 8219

2100 6119

14000 11176 0 4800 4800 46272 8578 1198 43367

6560

18417 0 0

1.2

43.3

31.2

30.7

28.9

30.7

36.1

36.9

13.1

43.3

132.6

15.8

0.2

400.8

555.2

4.9

2.1

19.2

70.2 330304

330304

10539 340843

165 0 14128 239100 24397 63052 0 63052 42346 105398 29761 75637

17100 58537

28500 544305 0 0 0 369585 83565 197 762082

0 93107 195189 82004

0.5

29.7

8.8

19.1

19.1

31.9

28.2

13.9

51.5

26.5

201.0

11.7

0.00

0.0

204.0

15.2

4.3

43.9 -18.4

316420 316420 19392 335813

72 0 13718 249451 17245 55327 0 55327 -1001 54326 16561 37766

12825 24941

28500 488218 0 6300 0 256783 59347 241 677616

0 68360 147771 75267

0.4

22.9

7.7

17.5

17.5

17.2

30.5

7.0

39.2

13.3

181.3

11.9

0.0

0.0

231.1

20.1

4.3

-24.6

256.1

INDRAPRASTHA GAS

CNG Leader

I
ndraprastha Gas (IGL) is a joint venture of Gas Authority of India, Bharat Petroleum Corporation and the Government of National Capital Territory (NCT) of Delhi. The company is the sole supplier of compressed natural gas (CNG) to the automobile sector and piped natural gas (PNG) to domestic and commercial sectors in NCT, Delhi.

During 2004-05, IGL showed an improved performance both in terms of sales turnover and profitability over the previous year. The company’s net sales stood at Rs 450 crore, a rise of 7 per cent and net profit at Rs 92 crore, an increase of 12 per cent. The company sold 390.06 million scm of CNG to the automobile sector and

15.20 million scm of PNG to the domestic and commercial sectors in 2004-05, as against 365.98 million scm of CNG and

10.88 million scm of PNG, respectively, in 2003-04. The price of CNG is economical and much lower as compared to the cost of petrol and diesel with the result that more automobiles are switching over to CNG.

During the period under review, the company further augmented its CNG distribution stations from 120 to 134. The compression capacity went up from 16.13 lakh kg/day to 16.88 lakh kg/day in 2005. The company extended piped natural gas distribution to a few more new areas in Delhi. IGL has planned a capital expenditure of Rs 44 crore for PNG expansion in Delhi during the current year to provide additional PNG connections to over 30,000 domestic household, 75 small commercial and 16 large commercial customers.

For the nine months ended December 2005, IGL posted good financial results. The company’s net sales rose by 15.5 per cent to Rs 385 crore over the same period of the previous year. The overall profitability of the company was enhanced due to a significant fall in interest payment and tax charges. Therefore, the net profit of IGL increased by 21 per cent to Rs 76 crore

Notes: P/E multiples are the latest with corresponding last year’s figures. during the period under review.

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Economic and Political Weekly March 25, 2006

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