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JSW Steel has reported that its net profit in the third quarter of this fiscal more than halved due to sharp increase in iron ore price, lower demand and a forex loss of Rs 500 crore.
The company's raw material cost jumped 47 per cent to Rs 5,310 crore (Rs 3,611 crore), while power and fuel cost doubled to Rs 439 crore (Rs 287 crore). The net finance charges shot up sharply to Rs 282 crore (Rs 132 crore) on back of rising interest cost.
The company's gross debt on a standalone basis stood at Rs 15,700 crore and net debt was at Rs 13,500 crore after taking into account the cash balance of Rs 2,200 crore on the book. On a consolidated basis, the gross debt was Rs 21,100 crore and net debt was Rs 17,730 crore. The company intends to tap various options to fund redemption of $274.6 million worth of FCCBs, due in June.
Margins down
The company's margins declined to 15.9 per cent in the quarter under review from 17.2 per cent due to fall of Rs 500 a tonne in realisation. Overall capacity utilisation during the quarter was at 73 per cent after a dip in October and November due to non-availability of iron ore following the Supreme Court order to stop mining in Karnataka.
Mr Seshagiri Rao, Joint Managing Director, JSW Steel, said the company has managed to buy seven million tonne of iron ore e-auctioned by NMDC and has already received 52 per cent of the material.
“We expect the Supreme Court to lift the blanket mining ban in Karnataka and allow at least the clean mines to operate. Of the 25 million tonne of inventory, the Government agencies have already auctioned 18 million tonnes. The remaining stock may not be enough to keep the industry running for three to four months,” he added.
Steel prices have revived in January after a fall in the December quarter, while raw material prices have also eased.
“Domestic steel prices have gone up by two per cent since mid-December following restocking by major stockists. Long products are witnessing better demand as many of the secondary steel producers have shut shop recently,” he said.
The company's shares were down three per cent at Rs 648 on the BSE Friday.
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