The Hindu Business Line : Jindal Vijayanagar Q1 net profit up at Rs 54.89 crore

DESPITE rise in input costs, margins moved up helping Jindal Vijayanagar Steel Ltd (JVSL) report a 139 per cent increase in net profit at Rs 54.89 crore for the first quarter ended June 30, 2004, against Rs 22.92 crore in the year-ago period.

The company produced 3,55,154 tonnes of hot rolled coils and sold 3,58,168 tonnes. The pellet plant produced 7,50,081 tonnes during the quarter.

The company shut down its hot strip mill for seven days during April and May 2004 for capital maintenance and the pellet plant for 13 days for enhancement of capacity from 3 million tonnes (mt) to 4.2 mt. Despite lower production due to the shutdown, the company posted the highest ever sales of Rs 1,059 crore at a growth of 38 per cent over the year-ago period, according to a JVSL news release.

The company achieved an EBIDTA margin of 29 per cent on net sales despite steep increase in the input prices of coal and coke, the release said.

"The strategic cost reduction initiatives taken by the company - captive coke manufacturing facility and lower power tariff - are expected to improve operating margins significantly on commissioning of these projects," it said.

The company repaid Rs 131 crore during the quarter.

The blast furnace being set up by Euro Icon Iron and Steel Pvt Ltd is expected to be in operation by end July/August 2004, increasing the steel plant capacity to 2.5 million tonnes per annum (mtpa). Similarly, the coke project being implemented by Euro Coke Energy Pvt Ltd will also be operational during the third quarter of 2004, due to which, the cost of coke will come down significantly.

The power tariff is also expected to come down on commissioning of the 100-MW power plant in December 2004 by JSW Power Ltd. These reductions in costs are expected to improve profitability.

The combined turnover of the merged entity on implementation of the scheme in the current quarter is Rs 1,340.83 crore (net of excise of Rs 1,283.05 crore) and EBIDTA of Rs 425.77 crore with an operating margin of 33 per cent on net sales. The net profit after tax is Rs 1,08.07 crore.