Q2 results: JSW Steel reports 20% rise in consolidated net profit on lower tax outgo

Our Bureau Mumbai | Updated on October 23, 2019 Published on October 23, 2019

File photo   -  REUTERS

The company had deferred a tax credit of Rs 1,848 crore during the quarter

JSW Steel has reported a 21 per cent increase in its September quarter consolidated net profit at ₹2,536 crore against ₹2,087 crore largely due to lower cost and write back of Rs 1,976 crore deferred tax.

However, gross sales were down 20 per cent at ₹16,737 crore (₹20,891 crore).

Given the sharp fall in demand and weak sentiments, the company has cut its planned capital expenditure by Rs 4,700 crore for this fiscal to Rs 11,000 crore from Rs 15,700 crore.

The company has delayed expansion of cold rolling capacity at Vasind, tin plate capacity addition at Tarapur Maharashtra and colour coated capacity at Vallabh in Punjab.

JSW Steel also expects it will fall short of both sales and production target by three per cent. It has given a production guidance of 16.95 million tonnes and sales of 16 mt at start of this fiscal.

The company also availed Maharashtra government incentive of Rs 512 crore on the învestments made at its Dolvi plant.

Seshagiri Rao, Jt Managing Director, JSW Steel said two subsidiaries of the company JSW Colour Coated and JSW Industrial Gases has moved to the new tax regime of 25 per cent and enabled a deferred tax write back of Rs 1,976 crore during the quarter.

The parent JSW Steel still has a Minimum Alternative Tax credit of Rs 4,500 crore and will move new tax regime of lower tax once this is exhausted, said Rao.

The company's Ebitda during the quarter was down at Rs 7,768 per tonne against Rs 12,118 logged in the same period last year while the same in June quarter was at Rs 10,214.

The company's debt increased by Rs 3,000 crore to Rs 49,640 crore.

JSW Steel production was down eight per cent at 3.84 million tonnes while sales dipped nine per cent to 3.60 mt. Despite weak demand, the company has managed to bring down its inventory by 48,000 tonnes to 1.3 mt, which is equivalent to 15-day inventory.

Seshagiri Rao, Jt Managing Director, JSW Steel said signs of pick up in demand are already visible with the auto sector exhausting inventory at the dealers' level by offering discounts and sale of steel used for construction sector increasing with higher government spending.

Domestic steel prices which are already at a discount to imports will start recovering once the demand picks up, he added.

Shares of the company were up one per cent at Rs 223 on Wednesday.

Published on October 23, 2019
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