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Jindal Saw: A brief overview - Views on News from Equitymaster
 
 
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  • May 17, 2007

    Jindal Saw: A brief overview

    About the company: Incorporated in 1984, Jindal Saw Ltd. (JSL) is the only Indian pipe manufacturer with capabilities to produce HSAW (helical submerged arc welded pipes), LSAW (longitudinal submerged arc welded pipes), seamless and DI (ductile iron) pipes. JSL also holds the distinction of being the only Indian player to have a manufacturing facility in the U.S. Over the years, the company has firmly established as a reputed supplier in the international markets, with exports accounting for 66% of revenues in FY06.

    Product Mix: Through its multi-product offering, JSL caters to diverse user segments energy transportation sector, industrial applications and water and sewage transportation.LSAW pipes are primarily used in oil & gas industry, while HSAW pipes find application in the oil & gas industry and water transportation. On the other hand, DI pipes are used for water transportation, sanitation and housing. As can be seen in the chart below, the company derives a chunk of its revenues from SAW Pipes and US operations.

    Manufacturing facilities and capacity: The company's saw pipes are manufactured at three manufacturing facilities, located at Kosi Kalan (U.P.), and at Nanakapaya and Samaghoga in Mundra. The manufacturing plants at Mundra were set up to cater to the exports, as port based facilities reduce transportation cost from India to Middle East. The company's seamless tubes and pipes are manufactured at Nashik, Maharashtra. The company also has two affiliates, Saw Pipes, USA and Jindal United Steel Corporation (JUSCO).

    Manufacturing capacity (TPA)
    Location Saw Pipes Seamless Tubes DI - CI Pipes
    (HSAW and LSAW)
    Kosi-Kalan, UP 250,000 - -
    Nashik - 100,000 -
    Mundra (IPU) 350,000 - 200,000
    Mundra (EOU) 350,000 - -
    Total 950,000 100,000 200,000

    Order Book position: As of January 2007, the company had an order book of around US$ 1,200 m (around Rs 52 bn), with LSAW pipes accounting for almost 88% of the same.

    Order Book
    Segments US$ (m)
    India 800
    LSAW 700
    HSAW 50
    Seamless & DI 50
    USA 400
    LSAW 350
    Plates 50
    Total 1,200

    Financial Performance: Jindal Saw has registered a robust 53% CAGR in topline between FY03 to FY06. Average operating margins during the same period stood at 11.5%, whereas average net margins were 4.6%. Due to decline in operating margins, the growth in net profit was slower at 23%. Since steel accounts for 70% of the total raw material cost, increase in steel prices has had a negative impact on the operating margins.

    Financial Performance - Standalone numbers
    Particulars 2003 2004 2005 2006 3 Yr CAGR/Avg.
    Sales 6,930 10,821 23,136 38,557 53.6%
    Operating expenses 5,341 9,500 20,465 34,457  
    EBIDTA 1,589 1,320 2,672 4,099 26.7%
    EBDITA margins 22.9% 12.2% 11.5% 10.6% 11.5%
    Other income 20 60 144 231  
    Depreciation 184 219 354 519  
    Interest 381 387 947 1,262  
    Profit before tax 1,044 775 1,515 2,550  
    Extraordinary items - - - 83  
    Tax 283 212 508 871  
    PAT 761 562 1,007 1,762 23.4%
    Net Profit margin 11.0% 5.2% 4.4% 4.4% 4.6%

     

     

    Equitymaster requests your view! Post a comment on "Jindal Saw: A brief overview". Click here!

    1 Responses to "Jindal Saw: A brief overview"

    sunandacharan

    Jun 7, 2010

    what about jsw steel in future market

    Like (1)
      
    Equitymaster requests your view! Post a comment on "Jindal Saw: A brief overview". Click here!
     

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