BETTER EVERYDAY
BETTER EVERYDAY
Dear esteemed shareholders
It is a pleasure to write to you once again, reflecting upon a year that has presented its fair share of challenges as we operated in a volatile landscape. Throughout this period, we have witnessed first-hand the power of our agility in navigating obstacles while seizing promising opportunities.
Amidst the prevailing uncertainties on a global scale, I am pleased to report that the Indian economy has exhibited remarkable resilience, successfully steering through a volatile international environment and geopolitical tensions, ultimately achieving a high growth rate. While recent developments have shown improvements in the global economic outlook, including the moderation of commodity prices and the normalisation of supply chains, we remain cognizant of the persistent concerns regarding potential recessions in select developed economies. The aggressive monetary tightening measures implemented to curb inflation are anticipated to exert a dampening effect on growth in these regions.
To this effect, the Board remains exceptionally diligent in carrying out its supervisory role, and nowhere is this more crucial than in risk management. Board members collaborate closely with Management to guarantee that meaningful risks are thoroughly identified, assessed and mitigated to the extent possible. Throughout fiscal 2023, we examined the impact of inflation, the ongoing war in Ukraine, supply chain disruptions, cybersecurity threats, human capital, climate technologies, and emerging market priorities and prospects to ensure that the associated risks and opportunities were comprehensively accounted for.
In the face of this challenging external environment, JSW Steel has demonstrated resolute strength and delivered a resilient performance. Although the elevated costs of raw materials and inputs weighed upon our margins during the first half of FY 2022-23, we have experienced a significant recovery in our performance during the latter half of the year.
Emerging stronger amid uncertainties
The synchronised tightening of central bank policies across the globe had an adverse impact on steel demand and led to a decline in steel prices on a global scale. Adding to this, the Indian government-imposed duties on domestic steel exports in May 2022, which directly affected our near-term profitability. Furthermore, as global demand remained subdued, India experienced a sharp increase in steel imports, reaching a three-year high of 7 MnT.
In the midst of these formidable headwinds, we demonstrated unwavering resilience, maintaining our capacity utilisation levels at 90%. We grew our India consolidated crude steel production to 23.62 MnT during FY 2022-23, and also achieved sales volumes of 21.86 MnT.
We delivered an EBITDA of ₹18,547 crore and achieved a Net Profit of ₹4,139 crore during FY 2022-23. Our unflinching commitment to creating value for our esteemed shareholders is reflected in our maintaining a 20% dividend payout ratio.
Our commitment to innovative products led us to create substantial downstream capacities, safeguarding our margins and ensuring we cater to the evolving needs of our esteemed customers. One such initiative is our plan to establish a state-of-the-art Cold Rolled Grain Oriented Electrical Steel manufacturing facility at Vijayanagar in a joint venture with JFE Steel of Japan. These strategic initiatives position us at the forefront of technological advancements.
SAJJAN JINDAL CHAIRMAN
Growing with purpose and conviction
The Indian government's commitment to infrastructure-led economic growth and the overall traction of the economy have begun to yield remarkable results, translating into robust steel demand growth. In FY 2022-23, we witnessed annual growth of 13.3%, reaching 120 MnT of domestic steel consumption. Looking ahead to FY 2023-24, we anticipate an incremental steel demand of 8-10 MnT in India.
Amidst this backdrop of soaring demand, I am elated to announce that JSW Steel is unequivocally the best-placed steel company to meet this need. Our constant dedication to expansion and innovation positions us optimally as we add 9 MTPA of new capacity, projecting a total capacity of 37 MTPA in India by FY 2024-25. To support our ambitious growth trajectory, we have outlined a capital expenditure plan of approximately ₹50,000 crore over the next three years.
Looking further into the future, the Government of India, through its visionary National Steel Policy, has envisioned a capacity of 300 MTPA in India by FY 2030-31, aligning with the nation's escalating demand. Within our robust portfolio, we have identified compelling growth opportunities and are targeting a capacity of 50 MTPA by the end of this decade.
Our organisation was built for times like these
Embracing the principles of innovation and excellence, we are also making significant investments in research and development. This strategic focus enables us to spearhead advances in crucial areas such as new process and product development, quality and productivity enhancements, cost and energy optimisation, as well as waste utilisation–all of which is conducted at our state-of-the-art R&D centre in Vijayanagar. In FY 2022-23 alone, we proudly introduced 125 new product grades, including 39 in the Advanced High-Strength Steel (AHSS) category and 15 aimed at import substitution.
In our firm commitment to excellence and fostering collaboration, we have partnered with the prestigious IIT Bombay, an 'Institution of Eminence', to establish the JSW Technology Hub within its renowned Centre of Excellence in Steel Technology (CoEST).
Leading the decarbonisation and energy transition agenda
I am pleased to share with you the tremendous strides we have made in enhancing our environmental performance, reaffirming our firm commitment to sustainable practices. We are on track to achieve our ambitious goal of reducing CO2 emissions intensity by 42% (over base year 2005) by 2030.
In line with our commitment to renewable energy adoption, we have already secured contracts for 1 gigawatt (GW) of capacity while successfully operationalising 225 megawatts (MW) of solar capacity at our Vijayanagar plant in April 2022, making it the first steel plant in India to embrace large-scale renewable energy deployment.
As we aim to reach a capacity of 50 million metric tonnes, our aspiration is to power our entire setup through 10 GW of renewable capacity, making us possibly the world's first major steel manufacturer to achieve this milestone. Another bold step involves incorporating green hydrogen into our Direct Reduced Iron (DRI) plant at Vijayanagar, propelling us forward in the production of low-carbon-emission steel.
While renewable energy and hydrogen technology form a crucial part of our decarbonisation strategy, we recognise that it alone is insufficient to fully decarbonise the steelmaking process. The production of primary steel relies on the utilisation of fossil fuels to convert iron ore into steel. To address this challenge, we have launched the Sustainable Energy Environment & Decarbonisation (SEED) project. Through efficiency improvements and a comprehensive change management approach, SEED aims to reduce CO2 emissions from our existing assets. I am pleased to report that in its inaugural year of implementation, SEED has already yielded visible improvements, further bolstering our environmental stewardship.
I am delighted to share that our commitment to environmental excellence is only growing. Once again and for the fifth consecutive year, we have been ranked ‘Sustainability Champion’ by the World Steel Association. We were also recognised by CDP (formerly Carbon Disclosure Project) as we secured the highest Climate Change rating of 'A', positioning JSW Steel among an exclusive group of three global steel manufacturers to receive this prestigious accolade.
To reinforce our commitment, we have joined Responsible Steel, the only global multi-stakeholder standard and certification initiative for responsibly sourced and produced steel.
Accelerating impact–On and off the factory floor
Our Company has made remarkable progress in driving diversity and inclusion throughout the organisation.
We have observed the remarkable impact of all-women teams, shattering conventional stereotypes. These empowered women are now taking charge of their own narratives by skillfully operating heavy earth-moving machinery at mines and production units in mills. This shift in perspective underscores our unyielding dedication to nurturing a culture that celebrates diversity and enables individuals to unleash their maximum potential. As a result of such endeavours, JSW has once again, for the third consecutive year, been recognised as a 'Great Place to Work', highlighting our commitment to a nurturing work environment that values and empowers the workforce.
In relation to our prominent JSW Foundation, we continue to drive positive change through initiatives that will have a lasting impact on society. This year we inaugurated the JSW School of Public Policy at IIM Ahmedabad, aiming to become a research-oriented think tank and a premier training institute for developing robust public policies. Additionally, our foundation extended its support to the Tata Memorial Centre, enhancing facilities for cancer patients. Operating at a national level, the JSW Foundation remains focused on the upliftment of rural communities through Education, Health & Nutrition, Skill Development, Environment & Water, Sports, and Art & Heritage initiatives. It now operates across 22 rural locations in 11 states benefiting over a million lives.
Looking ahead with optimism
The Indian growth story continues unabated, propelled by a strong human capital base, robust domestic consumption, and expanding manufacturing capabilities. The government aims to increase the share of manufacturing in GDP to 25%. The global supply chains are experiencing realignment, with a defined shift towards a China+1 sourcing approach, benefiting India, as global buyers seek cost-effectiveness and stability. India's impressive infrastructure developments–propelled by the Gati Shakti project–metros, airports, freight corridors, waterways, high-speed trains, and road networks, will further accelerate growth.
At JSW Steel, our unwavering commitment to continuous improvement is reflected not only in our outstanding financial performance as India's largest steelmaker but also in our ability to meet essential environmental, social, and governance (ESG) targets. By delivering on these fronts, we are enhancing long-term shareholder value.
As a result of such endeavours, this year JSW Group climbed eight places in the league table of top 50 brands and is now officially the fastest growing brand over the last 10 years. (Source: Interbrand)
Acknowledgement and gratitude
Before concluding, I would like to acknowledge the invaluable contributions of Mr. Seshagiri Rao, our Joint Managing Director and Group CFO, who recently superannuated. Mr. Rao has been a stalwart and a pillar of strength for JSW Steel. I extend my deepest appreciation, as I join our entire workforce in recognising his exceptional contributions. Furthermore, I am pleased to announce the elevation of Mr. Jayant Acharya, another JSW veteran, as our Joint Managing Director and CEO. Additionally, Mr. Gajraj Singh Rathore, our COO, joins the Board as a Whole Time Director. As we welcome these esteemed leaders into their new roles, I have no doubt that their expertise and strategic vision will propel JSW Steel to even greater heights.
I would also like to express my sincere gratitude to our independent director, Mr. Harsh Mariwala, as his tenure concludes in July 2023. His invaluable contributions have greatly enriched our board discussions, and we are immensely grateful for his guidance and wisdom.
I want to extend my heartfelt gratitude to the outstanding and diligent team at JSW Steel. It is their persistent commitment and tireless efforts that drive us towards excellence each day. I would also like to express my appreciation to our board members, whose guidance and advice have been vital in shaping our strategic path and accomplishing our objectives.
As we look towards the future with optimism and determination, I assure you that JSW Steel remains steadfast in its pursuit of excellence and sustainable growth. Together, we will continue to build a brighter future for JSW Steel and contribute to the progress of our great nation.
Sincerely,
SAJJAN JINDAL