JSW Steel Ltd has reported a consolidated net loss of Rs 116 crore for the second quarter this fiscal against a profit of Rs 691 crore in the last corresponding period. It recorded a foreign exchange loss of Rs 851 crore during the quarter.
The Sajjan Jindal-promoted steelmaker saw the highest-ever sales of 3.13 million tonnes (mt), while production increased 37 per cent to 2.98 mt. It managed to reduce inventory with a buoyant demand.
Net sales were up 35 per cent at Rs 12,796 crore, while the company registered the highest operating earning before interest, tax, depreciation and amortisation at Rs 2,234 crore.
JSW Steel’s exports rose 23 per cent to 840,000 tonnes, accounting for almost 10 per cent of the total exports in the September quarter. In the first half of this fiscal, its exports touched 1.12 mt, adding up to 50.3 per cent of the country’s shipment.
Seshagiri Rao, Joint Managing Director, said but for the forex loss, the company would have fared much better financially as there is a marked turnaround in most overseas subsidiaries’ operations.
“We completed the process of hedging our forex exposure this quarter. This will mitigate forex transactional loss from the next quarter onwards,” he said without revealing the rate at which the hedge has been executed.
The company plans to raise $600 million (about Rs 3,600 crore) through external commercial borrowing (ECB) to refinance its debt in foreign currency. It has a net debt of Rs 30,435 crore of which 39 per cent is in foreign currency. The average cost of fund will reduce by one per cent to 7.24 per cent once the ECB is completed.
“Our intention is to hold debt equally in rupee and dollar. Once the refinance is completed, rupee debt will reduce to 52 per cent,” he said.
JSW Steel has given yearly production estimate of 12 mt and has achieved 5.68 mt till the September quarter. Sales in the first half of this fiscal were at 5.65 mt, almost halfway to the 11.55-mt it intends to sell this fiscal.
The company commissioned the country’s largest auto grade steel rolling plant at Vijayanagar, Karnataka, this quarter.
The company expects steel demand to increase in both domestic and international markets with an upward bias in selling price. Ruling out the possibility of Tuesday’s rate hike by the RBI pulling down steel demand, Rao said banks may wait for at least two months before taking a decision on lending rates as they have enough liquidity in the system.
The company’s scrip gained 0.19 per cent on Tuesday on BSE to Rs 861, while the benchmark Sensex rose 1.74 per cent to 20,929.01 points.
suresh.iyengar@thehindu.co.in