JSW Steel is now the largest steel maker in India

Company reports higher revenue than SAIL and Tata Steel India in FY15, but lags both in profits

Sajjan Jindal-owned JSW Steel is now the largest steel maker in the country ahead of long-time market leader Steel Authority of India (SAIL). Last year, the company had overtaken Tata Steel to become the number two in the industry.

JSW Steel reported net sales of Rs 52,971 crore in the year ended March against Rs 45,710 crore reported by SAIL. In comparison, Tata Steel’s India operations reported net sales of Rs 33,666 crore in the same period.

Including its global operations, however, Tata Steel remains the largest with revenue of Rs 139,503 crore. That’s the reason why Tata Steel is not losing much sweat over the rise of JSW. “Tata Steel remains the preferred choice for marquee customers and we sell every bit of steel that we produce in India,” said T V Narendran, chief executive officer of the India operations of Tata Steel, at the company's earnings conference.  

Analysts say the top slot in the domestic market in terms of revenues is a huge leg-up for JSW Steel and is the culmination of its long-term plan to close the capacity and product portfolio gap with its two larger peers. The company has been steadily raising its production capacity in the home market through brownfield expansion and strategic acquisitions.

JSW tops the industry in capacity utilisation, too. In the fourth quarter, it operated its plants at 90 per cent rated capacity. In comparison, Tata Steel India operated at 80 per cent capacity due to raw material shortage.  “JSW’s revenue run-rate clearly indicates that it had higher utilisation levels compared to its peers in the March quarter,” said an analyst with a local brokerage house.

State-owned SAIL had 19.5 million tonne capacity as on March 31, 2015, while 108-year old Tata Steel India can produce 10 million tonne steel at its Jamshedpur works. JSW Steel, on the other hand, has 14.3 million tonne capacity, making it the country's second largest steel producer after SAIL in terms of production capacity.

Analysts, however, say a single quarter performance may be too short a period to judge whether JSW Steel can sustain its position at the top as the largest steel maker in the domestic market. Tata Steel is close to commissioning its 3 million tonne green field unit in Orissa while SAIL is raising its capacity to 23 million tonnes.

Also, JSW has a lot of ground to cover on profitability. At the operating level, Tata Steel India was the highest at Rs 8,011 crore in the year ended March (down 35 per cent yoy), followed by JSW Steel, which witnessed a marginal fall of 0.25 per cent on a year-on-year basis to Rs 5,967 crore. SAIL though showed a 19 per cent increase on year-on-year basis at the operating level to Rs 2,858 crore in FY15.

In terms of net profits, JSW Steel is much lower than its peers. It recorded a net profit of Rs 1,796 crore in FY15 (up 75 per cent from preceding year). SAIL saw its profits at Rs 2,117 crore down 24 percent from same period last year on high finance cost. Tata Steel India led this list reporting a net profit at Rs 6,439 crore.