AM/NS India, formerly Essar Steel, has recorded a nearly three-fold jump in underlying profitability during the January-March quarter in line with its peers in the industry.

The company recorded $403 million EBIDTA (earnings before interest, depreciation, tax and amortisation) in the first quarter of 2021 compared with $140 million in the same period of 2020, translating into a 188 per cent jump.

EBIDTA, an indicator of underlying health of the business, was up by 47 per cent quarter on quarter basis, growing from $274 million recorded in the last quarter of 2020.

AM/NS India, a joint venture between ArcelorMittal and Nippon Steel, produced 1.8 million crude steel in the first quarter, indicating an annualised production of 7.2 million tonne.

The performance of the India JV powered the parent AM to record its strongest quarter in a decade globally with $3.2 billion in EBIDTA and $2.28 billion in net income, compared with a net loss of $1.12 billion and EBIDTA of $0.96 billion in Q1 of 2020.

Aditya Mittal, CEO of ArcelorMittal said: “Operationally, we have had a very positive start to the year. We are seeing a continuation of the positive market dynamics of the fourth quarter and have been steadily bringing back production in-line with the demand recovery, which is supported by low inventory levels through the value chain.”

Road ahead

Laying out plans for the short term, the Indian JV said it would de-bottleneck existing operations to achieve 8.6 million tonne capacity while in the medium term, the steelmaking at Hazira (Gujarat) complex would reach 14 MT.

On the east coast of the country, AM/NS will kick off a new 6MT pellet plant at Paradip (Odisha) to ensure a cheaper source of raw material.

Dilip Oommen, CEO, AM/NS India, said: “Our business continues to grow strongly with demand generated from domestic and export markets. The steel industry in India remains attractive and increasing demand is giving the industry the required fillip.”

ArcelorMittal and Nippon Steel acquired Essar Steel through an insolvency process in December 2020 for Rs 42,000 crore and renamed it AM/NS India. The parent expects the expansion to be funded from the cash generation of the JV and on the strength of the balance sheet of the domestic business.