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ESL Steel Unlisted Shares

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ESL Steel Essentials

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ISIN

INE481K01021

Face Value

₹10.00

Total Share

1,84,90,30,224

Total Income

₹4,899.23 Cr

Profit After Tax

₹2,732.01 Cr

EPS

₹14.78

P/E

2.64

P/B

1.48

Market Capitalisation

₹7,211.22 Cr

Enterprise Value

₹10,710.17 Cr

Book Value

₹26.28

Intrinsic Value

₹87.47

Earnings Yield

37.90 %

Sector

Materials

Sub-sector

Iron & Steel

ESL Steel Growth

Compounded Sales Growth

9.00%

1 Year
10.56%

5 Year
62.41%

9 Year

Pro Only

Compounded Profit Growth

12426.88%

1 Year
49.32%

5 Year
38.07%

9 Year

Pro Only

Return On Equity

56.23%

2021
-893.62%

2017
-15.10%

2013

Pro Only

About ESL Steel

ESL Steel Limited (formerly known as Electrosteel Steels Limited) is a fully integrated iron and steel plant, situated at Siyalijori Village in Bokaro, Jharkhand.
ESL has a 1.5 million tonnes per annum (MTPA) greenfield integrated steel plant that produces pig iron, billets, TMT bars, wire rods, and ductile iron pipes.
In June 2018, Vedanta Limited acquired the management control of ESL through the corporate insolvency resolution process initiated for addressing the resolution of non-performing assets of the Indian banking system.
On September 26, 2020, the name of the company changed from "Electrosteel Steels Limited" to “ESL Steel Limited”.
The company has recently introduced its rebranded product range in the market under three new brands, V-DUCPIPE for Ductile Iron pipes, V-XEGA for TMT bars and V-WIRRO for wire rods.
Vedanta aims to scale up its steel operations in Bokaro through brownfield expansion and be amongst the top steel producers in the country.
The plant works in sync with the prescribed environmental standards while bringing international expertise and solutions from reputed manufacturers to offer world-class services and products. Along with the latest technology, the plant operates in synchronisation with highest ecological standards.
Mr. Prasun Kumar Mukherjee is one of the Non-Executive Independent Director of ESL Steel Limited. He joined the board of ESL on 4th June, 2018.

ESL Steel IPO Details

The equity shares of the company were delisted from Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) with effects from December, 20, 2018. The equity shares are no longer available for trading on BSE and NSE with an exit price of INR 9.54 per share.

ESL Steel Merger & Acquisition

Acquisition

In June 2018, Vedanta Limited acquired the management control of ESL through the corporate insolvency resolution process initiated for addressing the resolution of non-performing assets of the Indian banking system. Vedanta the whole wholly-owned subsidiary of Vendata Limited, subscribe for the share capital of the company for an aggregate amount of INR 1,805 Cr and provide additional funds aggregating of INR 3,515 Cr by way of debt. Upon implementation of the resolution plan, Vedanta Limited will hold approximately 90% of the paid up share capital of the company. The remaining 10% of the company’s share capital will be held by the company’s existing shareholders and the financial creditors who receive shares in exchange for the debt owed to them. The funds received by the company as debt and equity will be used to fully settle the debts owed to the existing financial creditors of the company, by payment of INR 5,320 Cr.

ESL Steel Subsidiaries

The company do not have any subsidiary/associate/joint venture company during the year ended March 31, 2021.

ESL Steel Business Model

The company has set up a green field integrated manufacturing facility, which is currently commissioned at a capacity of 2.5 MT per annum. The facility primarily consists of Sinter Plants, Coke Oven, Blast Furnaces, Oxygen Plant, Basic Oxygen Furnaces, Billet Caster, Wire Rod Mill, Bar Mill, Ductile Iron Pipes Plant and a Power Plant. The company's product range includes Pig Iron, Billets, TMT Bars, Wire Rods and Ductile Iron Pipes which are sold in India as well as overseas.

ESL Steel Revenue Segmentation

DI Pipes
Billets

TMT Bars
Wire Rods

PIG Iron
Scrap Sales

Incentive on Exports
Other Operating Income

Other Income

ESL Steel Product & Services

Billets
Wire Rods
DI Pipes
TMT Bars

ESL Steel Assets

Total assets of the company as on 31st, March, 2021.

Particulars	Amount in Rs. Cr.
Freehold land	212
Building	838
Plant and Equipment	3277
Furniture and Fixtures	2
Office Equipments	3
Railways Siding	72
Computer Softwares	4

ESL Steel Industry Overview

Industry Statistics

As of October 2021, India was the world’s second-largest producer of crude steel, with an output of 9.8 MT (million tonne). In FY21, the production of crude steel and finished steel stood a 102.49 MT and 94.66 MT, respectively.
The finished steel export has increased from 4.6 MT in FY12 at a CAGR of 7.6% to reach 10.8 MT in FY21. The finished steel export up to month of December for FY22 is 10.3 MT
The finished steel consumption has increased from 71 MT in FY12 at a CAGR of 3% to reach 94.8 MT in FY21 with construction sector contributing to 62% of demand. The consumption for the half year ended for FY22 was 33.7 MT.
On average, operating profit margin was at 29.7% and net profit margin was at 18.4% for the March 2021 quarter. For the June 2020 quarter operating profit margin was at 6.1% and net profit margin was at -5.44%. The steel industry reported the for the June 2021 quarter at 35.2%. The industry was able to achieve such a high margin due to pent up demand and high prices during the period. Both the prices and volumes have helped the industry to improve margins. The second half of the FY21 saw consumption grow by 13.69% in December 2021 quarter over December 2020 quarter and 20.74% in March 2021 quarter over the March 2020 quarter. Due to rise in demand and steel prices the industry was able to post strong growth in their sales revenue.
The growth in the Indian steel sector has been driven by domestic availability of raw materials such as iron ore and cost-effective labour. Consequently, the steel sector has been a major contributor to India’s manufacturing output.
The Indian steel industry is modern with state-of-the-art steel mills. It has always strived for continuous modernisation of older plants and up-gradation to higher energy efficiency levels.
India started exporting steel way back in 1964, exports were not regulated and depended largely on domestic surpluses. However, in the years following economic liberalization, export of steel recorded a quantum jump. Subsequently, the rapid growth of domestic steel demand has led to a decline in the rate of growth of steel exports from India to ensure that domestic requirements are adequately met. India is currently a net exporter of total finished steel.

Future Prospects

In FY21, the production of crude steel and finished steel stood a 102.49 MT and 94.66 MT, respectively. Crude steel production is expected to reach 112-114 MT, an increase of 8-9% YoY in FY22. The consumption of finished steel stood at 93.43 MT in FY21. Between April 2021 and September 2021, finished steel consumption stood at 49.11 MT.
The National Steel Policy 2017 has envisaged achieving up to 300 MT of production capacity by 2030-31. Expansion of production capacity to 300 MT will translate into additional investment of Rs 10 lakh crore (US$ 156.08 billion) by 2030-31.
During 2018-25F, the appliance and consumer electronics (ACE) sector will expand at a CAGR of 9.91 per cent, contributing to the growth of the steel industry.
Growth in automobile production is also expected to augment growth in steel production. Automobile production in India stood at 26.35 million units during FY20.
Gross Value Added (GVA) of the construction industry grew 4.4% during FY20 and is expected to post strong growth in the current fiscal year, backed by higher expenditure from the Government.
Since construction industry is a major consumer of steel, expansion across construction industry will translate into growth of steel sector.

Government Initiatives

Under the Union Budget 2020-21, the government allocated INR 39.25 Cr. to the Ministry of Steel. The budget's focus is on creating infrastructure and manufacturing to propel the economy.
In January 2021, the Ministry of Steel, Government of India, signed a Memorandum of Cooperation (MoC) with the Ministry of Economy, Trade and Industry, Government of Japan, to boost the steel sector through joint activities under the framework of India–Japan Steel Dialogue.
In September 2020, the Ministry of Steel prepared a draft framework policy for development of steel clusters in the country.
Government introduced Steel Scrap Recycling Policy to reduce import.
An export duty of 30% has been levied on iron ore (lumps and fines) to ensure supply to domestic steel industry.
The Union Cabinet, Government of India approved the National Steel Policy (NSP) 2017, as it intends to create a globally competitive steel industry in India. NSP 2017 envisages 300 MT steelmaking capacity and 160 kgs per capita steel consumption by 2030-31.
The Ministry of Steel is facilitating setting up of an industry driven Steel Research and Technology Mission of India (SRTMI) in association with the public and private sector steel companies to spearhead research and development activities in the iron and steel industry at an initial corpus of INR 200 Cr.
Ministry of Steel plans to invest INR 522 Cr. in the eastern region of the country through accelerated crude steel production is expected to reach 112-114 MT, an increase of 8-9% YoY, in FY22. This demand will be supported by economic recovery, government spending and enhanced liquidity. The Union Budget 2021-22 has a 34.5% YoY increase in allocation for capex at 5.54 lakh crore (US$ 74.60 billion). The budget’s focus is on creating infrastructure and manufacturing to propel the economy. In addition, enhanced outlays for key sectors such as defence services, railways, and roads, transport and highways would provide impetus to steel consumption development of the sector.

ESL Steel Awards & Achievements

ESL Steel Limited, a Vedanta Group Company won the most prestigious “9th Annual Greentech CSR India Awards 2022” for excellent accomplishments in the category of “Promotion of Healthcare".
ESL Steel got CII recognition for excellence in manufacturing. The company's Coke Oven team bags the first runner up position at the CII National Kaizen circle competition.
ESL Steel Limited has won the coveted Greentech Effective Safety Culture Award 2021 in the Metals & Mining Industry category for the second consecutive year for continuous improvements in building a safety culture at the shop floors.

ESL Steel Strengths

The company has been headed by Vedanta Group management, who have been able to create positive net profits for the company for the first time in many years, demonstrating that Vedanta's acquisition has been beneficial to the company in terms of efficiency and increased business opportunities.
The company is continuously working for the development of new products, grades, etc. for exploring the opportunity in new market segment. Further, trials of different types of coal to achieve the optimised coal blend were also undertaken during the year.
The organisation has been able to create operational efficiency, which has resulted in a lower cost per unit of expense.

ESL Steel Shortcomings

The company could bring in more revenue through exports as India is a net exporter of steel. The total export sales of the company has been able fairly low which accounts for 10% of the total sales of the company.
The company has been fighting litigations regarding the consent to operate the steel plant at Bokaro with State Pollution Control Board(PCB).
The company had defaulted its loan against SBI for which the company had gone under NCLT, which damaged the reputation of the company.
The company has generated a profit only because of the increase in deferred tax. The company suffered a loss of Rs. 21 Cr in FY21 before taxes were levied on it.

ESL Steel Opportunities

Government of India’s focus on infrastructure and restarting road projects is aiding the demand for steel. Also, further likely acceleration in rural economy and infrastructure is expected to lead to growth in demand for steel.
Huge scope for growth is offered by India’s comparatively low per capita steel consumption and the expected rise in consump-tion due to increased infrastructure construction and the thriv-ing automobile and railways sectors.

ESL Steel Threats

ESL relies on iron ore and coal for the production of steel. ESL's supply chain network is exposed to potentially adverse events such as physical disruptions, environmental and industrial accidents, scarcity of supply and the insolvency of a key supplier.
The company has a huge debt in its books, leading to huge interest expenses, which in turn could impact the overall solvency of the company if not targeted efficiently.
Commodity prices have historically shown significant volatility that reflects temporary shortage or surplus conditions in the markets. ESL currently imports 85 per cent. of the coal it requires for steel production which means production costs are particularly vulnerable to disruptions in global supply chains.
ESL is reliant on demand for steel in certain sectors and appetite for certain products. Any decline in those sectors or reduced demand for particular products could negatively impact ECL's profits.
The Government of India raised import duty on most steel items twice, each time by 2.5% and imposed measures including anti-dumping and safeguard duties on iron and steel items.
Most of the public sector units are plagued by inefficiency caused by heavy investment on social overheads, poor labour relations, inefficient management, underutilisation of capacity, etc. This hinders proper functioning of the steel plants.