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JSW Steel’s net profit in the June quarter increased almost four times to ₹2,339 crore against ₹624 crore logged in the same period last year, on the back of higher production and better realisation.
Sales were up 24 per cent at ₹19,950 crore (₹16,048 crore). Saleable steel output was up 9 per cent at 3.83 million tonnes in the quarter with sales in high margin automotive sector increasing 54 per cent.
Consolidated EBITDA per tonne of steel sold almost doubled to ₹13,570 (₹7,732), while on standalone basis it was ₹12,580 (₹6,269) on the back of better performance by the US and other subsidiary companies in India.
Seshagiri Rao, Joint Managing Director, said the domestic demand for steel was up 9 per cent with strong demand from all the segments, including automobile, white and yellow goods companies.
With the sharp increase in domestic demand, the company reduced exports to 12 per cent of overall sales compared to 23 per cent in the same period last year.
Cheap imports
However, rising cost and increasing imports remain a major concern for steel companies with the possibility of surplus steel in global markets flowing into India as the US and Europe shut their borders on cheap imports, he said. Steel imports into India almost doubled to 4.50 lakh tonnes in the June quarter with shipments from Korea, Japan and China — the largest steel exporters to the US and Europe — doubling their exports to India, said Rao.
Steel imports from these three countries are about $20 a tonne cheaper compared to prices in India, while colour coated products were sold at ₹8,000-9,000 a tonne lower due to inferior zinc and colour coatings, he added.
As a precautionary measure, he said the government should impose a safeguard duty of $200 a tonne on all steel imports. This will be somewhat equivalent to 25 per cent duty imposed in the US and Europe, he added.
The overall debt of JSW Steel increased by ₹875 crore to ₹39,090 crore due to a 5 per cent rupee depreciation. The company has 40 per cent of its debt in foreign currency.
The company has received shareholders’ approval to raise ₹10,000 crore through private placement of non-convertible debenture and another ₹4,000 crore via non-convertible debenture with warrants that can be converted into equity.
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