JSW Steel has reported a 26 per cent drop in net profit on a standalone basis at Rs 383 crore in the December quarter against Rs 514 crore registered in the same period last year largely due to high raw material cost.

This fall happened even while the company logged its highest ever quarterly sales and production of Rs 5,771 crore and 1.59 million tonnes. Flat steel output was up 37 per cent to 1.24 million tonnes while long products output jumped 13 per cent to 0.28 million tonnes.

Mr Seshagiri Rao, Joint Managing Director, said JSW brought down its inventory by 60,000 tonnes in the quarter under review. It fell to 374,000 tonnes from 564,000 tonnes between June and December.

“The benefit of higher production, better product mix and 13 per cent improvement in realisation was not reflected in the bottomline due to a substantial increase in cost of raw material including iron ore and coking coal,” he said.

Raw material cost increased 40 per cent to Rs 3,598 crore (Rs 2,566 crore). Price of coking coal almost doubled to $205/tonne from $128 a year ago. The company signed a coking coal supply contract at $221-225 a tonne for the March quarter, up from $209 in the December quarter. It also prepaid Rs 800-crore debt bringing down its consolidated borrowings to Rs 14,300 crore.

JSW Steel plans to set up a 2.3 million tonne cold rolling mill complex in two phases costing Rs 4,025 crore (2:1 debt, equity ratio) at its Vijayanagar works. It will produce auto grade steel and will comprise 1.9 mtpa of continuous annealing lines and 0.4 mtpa of galvanising-cum-galvannealing. The company will raise Rs 2,675-crore debt with the rest generated through internal accruals. It plans to complete the first phase by the first quarter of 2013 and the second phase by (first quarter of) 2014-15.

JSW Steel has invested 2,157 crore for subscription of 1,086,649,874 equity shares of Ispat Industries. It proposes to refinance Rs 7,500 crore of Ispat's debt by September.

The company forked out Rs 210 crore for acquiring Bellary Steel and Alloys (without liabilities) from IFCI which took over the plant under the Securities and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002. JSW Steel is yet to obtain possession of freehold land of 700 acres, building, plant and machinery of the partially completed 0.5 mtpa integrated steel plant since Sesa Goa, which was also in the race to acquire the company, has filed a case in the High Court against the deal.

The JSW Steel scrip was down 5 per cent at Rs 966 on Thursday.

Related Topics
comment COMMENT NOW