Delivering operational excellence despite several headwinds

During the year, we optimised our resources to maintain production levels, continued to invest in completing our growth projects, rationalised our cost structure, and implemented measures to enhance efficiencies.

Following the steps of Vijayanagar works last year, our Salem works received the prestigious and coveted Deming Prize this year, which testifies our commitment towards operational excellence.

WE EMERGED AS A PREFERRED BIDDER FOR FOUR IRON ORE MINES IN ODISHA, AND ADDITIONAL THREE MINES IN KARNATAKA, WITH AGGREGATE RESERVES OF CLOSE TO 1.2 BILLION TONNES.

Mainstreaming sustainability

At JSW Steel, we are committed to our environmental, social and governance (ESG) goals to create sustainable long-term value for all our stakeholders. JSW Steel was recognised as a Sustainability Champion for 2019 by the World Steel Association (worldsteel) for second year in a row.

We are committed in our efforts to reduce our carbon footprint, and are in the process of implementing plans to replace coal with renewable source of energy for generating power in our steel operations. Further, our Research & Development team is working on a lot of initiatives to reduce the intensity of metallurgical coal usage in our blast furnaces.

THIS YEAR WE ALSO OUTLINED A COMPREHENSIVE SUSTAINABILITY FRAMEWORK COMPRISING 17 CORE FOCUS AREAS, WHERE WE CREATE A SIGNIFICANT IMPACT.

This year we also outlined a comprehensive sustainability framework comprising 17 core focus areas, where we can create significant impact. Going forward, our ESG performance will be gauged under these focus areas, with respect to progress made under their respective components.

The safety and well-being of our people is of paramount importance to us. At JSW Group, our vision is to achieve ‘Zero Harm’. In order to help us reach this vision, we have fully integrated Health & Safety (H&S) as one our core Group values and are continuing to implement initiatives under the ‘VISION 000’ motto. Safety Officers have been appointed at all plant locations and Mentor Safety Officers have been deployed.

The JSW Foundation continued to make a positive difference across 255 villages in four states, aligned with our vision to ‘empower communities to create sustainable livelihoods’. Our CSR initiatives are focused on key intervention areas of health and nutrition, skills and livelihoods, education, water, sanitation and community empowerment.

JSW Shakti initiatives are being scaled up to empower rural women entrepreneurs across the country through rural BPOs and promotion of self-help groups (SHGs). We are also improving the quality of education in rural schools through infrastructure, training methodology and capacity building initiatives. In addition, we are undertaking environment upgradation programmes such as mangrove restoration and also working towards preservation of national heritage and promotion of Olympic sports.

Calibrating capex to prioritise returns-accretive projects

We have undertaken a detailed exercise to prioritise all planned and discretionary spends with a twin objective of conserving liquidity, and ensuring that strategic projects which are in advanced stages of completion are completed and commissioned on priority.

Due to the lockdown announced by the government, and its subsequent extensions to contain the spread, project activity at various sites were severely constrained by the non-availability of required manpower and material.

At Dolvi Works, we received the permission to restart activities towards the end of April 2020. We were able to ramp-up our existing operations in an efficient and a timely manner. However, progress on the 5 MTPA expansion project was hampered as a number of workers employed by our contractors began to head home, with low visibility of when this trend is likely to reverse. Further, non-availability of foreign experts (from our technology and equipment suppliers) due to international travel restrictions is also impacting the commissioning schedule.

Thus, the expansion of crude steel capacity at Dolvi Works from 5 MTPA to 10 MTPA, along with the captive power plant and coke oven plant, is likely to get delayed into the second half of FY 2021. The 8 MTPA pellet plant and the wire rod mill at Vijayanagar are expected to be commissioned by mid FY 2020-21. The downstream modernisation-and-capacity enhancement projects in Vasind and Tarapur, and the colour coating plant at Kalmeshwar are now expected to be commissioned in the second half of FY 2020-21.

We thus reduced our planned capex on all these projects to ` 8,200 crore for the year. Combined with the spend earmarked to operationalise the iron ore mines, our total planned capex for
FY 2020-21 stands at about ` 9,000 crore.

Focused on deleveraging and fiscal prudence

At JSW Steel, we remain committed to maintaining fiscal discipline and prudence in capital allocation, and our target to maintain leverage ratios at healthy levels.

Our net debt, which stood at about ` 53,000 crore at the end of March 2020, may appear to be high. If not for the pandemic-related disruptions in March, which led to a drop in sales and a subsequent inventory build-up, leverage at year end could possibly have been lower. However, of this amount, about ` 18,000 crore is leverage on account of new projects which are currently under implementation and at various stages of completion. In other words, our core leverage for the current 18 MTPA capacity is only about ` 35,000 crore, which is one of the lowest in the industry. As some of these projects get progressively commissioned during FY 2020-21 and start generating returns, it will set in motion a natural deleveraging process in the next year
i.e. FY 2021-22.

Fighting the pandemic with the nation

The continuing spread of COVID-19 has left in its wake significant losses of lives and livelihoods, being a health crisis with deep economic implications. Normal life came to a halt amid the lockdowns across the world, including in India in the latter part of March. JSW Steel was not immune to the impact of such global events. Our first response to COVID-19 was to institute a number of measures and protocols to ensure the safety of our colleagues and their families. Given the scale and size of our operations and facilities, there have been positive cases at our locations too. We are undertaking comprehensive measures to contain and mitigate the spread, and have extended all possible assistance to all affected, while trying to ensure uninterrupted operations.

As a Group, we remain committed to doing our bit for the country and supporting the frontline warriors, who are battling away to mitigate the spread of the virus. In addition to pledging
` 100 crore to the PM CARES Fund, we converted several facilities across our Group locations into isolation wards to relieve stress on the country’s healthcare system. Funds were also earmarked to source ventilators, testing and PPE kits. More than 250 people were trained on COVID-19 management and more than 2,750 habitations were sanitised. We also extended support by providing staples and other dietary requirements to more than 3,90,000 people – healthcare workers, migrant labourers and those stranded in the nationwide lockdown.

We will continue to do whatever it takes to help our colleagues, communities and citizens, to defeat this crisis.

A firm believer in 'never let a crisis go waste'

We paused to save lives. Now, it is time to go full throttle to save livelihoods. Global economies are opening up gradually. India too needs to get back to its full capacity at the earliest to be the successful economy that it aims to be. The pandemic presents a unique opportunity for India and its industries to increase influence in the global supply chain. It was the 1991 balance of payments crisis that prompted the government of the day to set in motion path-breaking reforms. India would not have been what it is today, had we not taken those steps. Almost thirty years hence, we have yet another government that has not shied away from undertaking bold and decisive reforms.

With a likely realignment of global supply chains, India has the scale and expertise to emerge as a location of choice. The ` 20 trillion fiscal and monetary stimulus package with a clarion call for making India self-reliant is a step in the right direction. The increased focus on strengthening the micro, small and medium enterprises (MSMEs), considered to be backbone of the economy, assumes paramount importance.

AS A GROUP, WE REMAIN COMMITTED TO DOING OUR BIT FOR THE COUNTRY AND SUPPORTING THE FRONTLINE WARRIORS, WHO ARE BATTLING AWAY TO MITIGATE THE SPREAD OF THE VIRUS. IN ADDITION TO PLEDGING ` 100 CRORE TO THE PM CARES FUND, WE CONVERTED SEVERAL FACILITIES ACROSS OUR GROUP LOCATIONS INTO ISOLATION WARDS TO RELIEVE STRESS ON THE COUNTRY’S HEALTHCARE SYSTEM.