High depreciation, finance costs hit JSPL profit in first quarter

Our Bureau Updated - August 06, 2014 at 10:38 PM.

Jindal Steel and Power Ltd has reported a 15.3 per cent fall in consolidated net profit for the first quarter of fiscal 2014-15. The net profit for the quarter stood at ₹418 crore against ₹494 crore in the same quarter last year.

The company said in a statement that the fall in profit was due to an increase in depreciation costs, financing costs and expense incurred due to restructuring of its Australian subsidiary Wollongong Coal Ltd. The company spent $16 million (or around ₹100 crore) for the restructuring of WCL when it laid off 38 per cent of the manpower.

During the quarter, the company reported a 9 per cent growth in consolidated net revenue at ₹4,978.38 crore. In the same quarter last year, the company had a ₹4,540.27-crore consolidated net revenue. JSPL’s consolidated finance cost more than doubled to ₹535.45 crore year-on-year, during the quarter. Its consolidated net debt stood at ₹37,500 crore as on June 30, after it added around ₹1,000 crore of debt during the quarter.

“Depreciation cost increased because we included the depreciation for our assets in Angul and all four units of Tanmar power project despite only one unit operating,” said Ravi Uppal, Group CEO and MD.

High cost debt To reduce the company’s interest expense, JSPL will seek to refinance its high cost debt into dollar-denominated loans.

“We expect the rupee-dollar to stable at these levels so it makes sense to refinance the loans. We won’t be adding any more debt and our capital expenditure of ₹6,000 crore in the current fiscal will be through internal cash generation,” said Rajagopal K, Group Chief Financial Officer.

Out of the company’s total debt, $1.8 billion (around ₹11,000 crore) is dollar denominated and the average cost of debt for the company now stands at around 8 per cent.

On Wednesday, JSPL's shares closed 2.58 per cent lower on the BSE at ₹274.25.

Published on August 6, 2014 11:10