The Hindu Business Line : JSW Steel Q4 net at Rs 413 cr

Steel strides
Has mega plan to up capacity to 10 mt/annum for India needs.
Looking to acquire service centres across UK for Euro markets.
In the process of taking over 3 mines in South Africa.

Mumbai April 30 A robust growth in the domestic and global steel demand helped JSW Steel post its highest-ever quarterly net profit of Rs 413.25 crore in the fourth quarter of last fiscal, against Rs 410.68 crore in the corresponding quarter of the previous fiscal.

During the quarter, the company's net sales stood at Rs 2,498.54 crore, reflecting a growth of 57 per cent.

In the last fiscal, the company completed modernisation of its hot strip mill capacity from 2 million tonnes (mt) per annum to 2.5 mt, commissioning of a 1.3-MTPA crude steel expansion and pellet plant capacity expansion from 4.2 MTPA to 5 MTPA. During the year, its crude steel output was 2.65 mt, an increase of 18 per cent from the previous fiscal.

JSW's debt gearing came down to 0.75 per cent, against 0.96 per cent in the previous fiscal, even after availing fresh loans for enhancing the capacity from 2.5 MTPA to 3.8 MTPA.

India was the seventh largest steel-producing nation last fiscal, with a total production of over 50 mt. Analysts have projected that India may become the second largest steel-producing nation within the next five years.

UK service centre buy

Mr Sajjan Jindal, Vice-Chairman and Managing Director of the company, told presspersons that JSW Steel, through its wholly-owned subsidiary JSW Steel (UK), has entered into a share purchase agreement to acquire 100 per cent stake in a service centre in UK, Argent Independent Steel.

Argent Independent was formed in October 2006 after a management buy-out of Thyssenkrupp Service Centre.

Mr Jindal said the acquisition was being made for a consideration of £3.75million, which included an existing loan of £2.1 million. The company will be using the facility to export steel products from India, process them at the centre and market them in the UK for the auto, construction and wide good manufacturers. "We will be looking to acquire more such service centres across the UK as part of our strategy to widen and consolidate our presence in the European markets," he said.

Rs 7000-cr expansion

With steel consumption in India growing at 12 per cent last year, JSW Steel has put up on its drawing board a Rs 7,000-crore expansion plan to increase its capacity to 10 mtper annum. The plan will be implemented within three years starting October 2007.

Mr Jindal said while Rs 2,000 crore will come from internal accruals, the remaining Rs 5,000 crore will be raised through FCCB/ADR/GDR.

The project configuration included a new sinter plant, coke oven, blast furnaces, two convertors and a 300-MW captive power plant.

Mr Jindal said the Ministry of Coal had allotted the Rohne coal block in Jharkhand, with geological reserves of 410 mt and mineable reserves of 250 mt. While JSW will own 69 per cent stake in the coal mine, the balance will be held by two other allottees, Bhushan Steel and Balaji Industries.

The mine, which will be operated by a separate company, may start production within the next two to three years. The annual capacity of the mine will be 8 MTPA and the output will be divided between the three companies in the ratio of their allotment.

The company is also in the process of taking over three mines in South Africa.