JSW Steel reported that its net profit was down 18 per cent to Rs 137 crore (Rs 168 crore) in the December quarter following lower capacity utilisation on the back of constraints in sourcing iron ore. Net sales were up five per cent at Rs 8,275 crore (Rs 7,860 crore). Earlier, the company said its consolidated results would be announced later.
The company booked a forex loss of Rs 267 crore in the quarter (Rs 500 crore in the same period last year). This was because of the four per cent depreciation in the rupee against the dollar. It also made a provision of Rs 60 crore towards carrying cost on its Rs 3,079-crore investment in US Plate and Pipe mill.
Justifying the provision, JSW Steel said it would be prudent to set aside the amount though the subsidiary may have a longer gestation period than originally planned. The company had considered a recent independent valuation of an underlying tangible asset and is in the process of making a detailed assessment of the fair value of net assets.
Steel output was up 14 per cent at 2.17 million tonnes. The capacity utilisation was at 78 per cent.
NMDC has not been able to produce one million tonnes of iron ore per month as per the Supreme Court directive given 17 months before, it said. So far only six mines of Category ‘A’ resumed operations. These mines produced 0.71 million tonnes so far but it has not been put on e-auction. In this backdrop, the company expects improvement in availability of ore in the March quarter.
Iron ore availability next fiscal will range between 19 and 21 million tonnes while the industry in Karnataka requires 30 million tonnes. However, the company is exploring the possibility of using dumps with very low quality.
Expansion and de-bottlenecking of coated products facility in Maharashtra will help enhance production to 1.2 million tonnes from 0.925 mtpa by first quarter of next fiscal.
The company expects imports from (Free Trade Agreement) FTA countries to remain a concern, while a turnaround in the economy is expected to stimulate steel demand from the next financial year. Pragmatic policies on iron ore mining, speeding up of infrastructure projects and an expected interest rate cut by RBI will also boost demand, it said.
Shares of the company were up one per cent at Rs 870 on Monday.