The Hindu Business Line : JSW Steel Q4 net rises marginally at Rs 411 cr

JSW Steel Ltd on Wednesday reported a net profit of Rs 856.53 crore for 2005-2006, near similar to the Rs 870.11 crore posted by it in the previous fiscal.

The company's net sales/income from operations slipped 7.47 per cent to Rs 6,180.1 crore (Rs 6,679.36 crore for the year ago period).

Of help was higher other income, which at Rs 382.96 crore (Rs 18.98 crore) included Rs 369.2 crore as profit on sale of shares of JSW Energy Ltd.

At a press briefing, senior officials pointed out that JSW Steel's performance was despite weaker steel prices and rising input costs. EBITDA margins dipped by only 6.5-7 per cent against near 12 per cent slide in steel prices year-on-year. Rising zinc prices kept galvanised steel margins under considerable pressure; customers resisting passed on costs beyond a point.

According to Mr Sheshagiri Rao, Director (Finance), cost reduction — 12 per cent in the fiscal year 2006 — and higher volumes were key to steadying results.

Q4 results

For the just ended fourth quarter, the company registered a marginally improved net profit of Rs 410.68 crore (Rs 404.14 crore) on reduced net sales/income from operations of Rs 1,583.24 crore (Rs 2,182.82 crore).

The board has recommended a dividend of 80 per cent on equity shares and 10 per cent on cumulative redeemable preference shares. It has approved raising funds by way of rights issue, FCCB or GDR, to part finance JSW Steel's Rs 7,000-crore capacity expansion to 6.8 million tonnes by 2009. Rs 3,800 crore as debt has been tied up.

Details of equity would be firmed up in the next three months. Mr Rao said, given the company's robust cash flows fresh equity could be no more than a modest component.

Revenue growth

He expected revenue growth of not less than 20 per cent in the financial year 2007. Over March-April 2006, hot rolled coil price had gained from $415 per tonne to $530. While estimating its fiscal 2007 revenue, JSW Steel restricted this bullish price trend to the early quarters, using a lower $405 level to calculate receipts for the remaining quarters. Mr Rao said this was a conservative measure, not reflective of bearish concerns. Shares of JSW slipped by Rs 12.35 to Rs 351.60 in Wednesday's trade on the BSE.