Higher interest cost,depreciation pull JSW Steel net down 10%

Sajjan Jindal-led JSW Steel Wednesday reported a 10 percent decline in consolidated net profit at Rs 1,603 crore for the quarter to December, due to a massvie decline in exports, depreciation cost for acquired assets, offsetting a good show by the domestic volume. Total income increased to Rs 20,355 crore from Rs 18,306 crore in the same period a year ago, registering an 11 percent growth.

"On a standalone basis net income grew 68 percent on an annualised basis. But yes, on a consolidated basis it declined 10 percent, due to the rising interest cost and the depreciation accumulated on account of the acquisitions made in recent months and these will take time to come down," its joint managing director and chief executive Seshagiri Rao told reporters. During the quarter, its crude steel production increased 3 percent to 4.23 million tonne aided by higher capacity utilization at both the Vijayanagar and Dolvi works.

"As domestic demand remained firm during the quarter, we strategically focused on increasing sales in the domestic market. However, exports dropped sharply by nearly 70 percent as both demand and pricing in international markets witnessed a soft patch, driving overall destocking and weak off-takes," Rao said. As a result, saleable steel volume for the quarter came down to 3.68 million tonne, lower by 7 percent.

"Given the production level in the first nine months which is at 12.52 million tonne, we will be able to maintain our guidance of 16.75 million tonne for the full year. "However, we will be slightly short of achieving our volume target of 16 million tonne for the year mainly because of the declining exports. We, however, expect exports to improve in the March quarter," Rao said adding the company will take various steps to reduce the inventory.

During the quarter, its subsidiary JSW Steel Coated Products produced and sold 4.2 lakh tonne. Its revenue from operations for the quarter stood at Rs 2,964 crore. The US-based Plate & Pipe Mill facility produced 91,183 tonne of plates and 16,367 net tonne of pipes, which is a capacity utilisation level of only 38 percent and 12 percent, respectively, during the quarter.

The US-based subsidiary JSW Steel Ohio Inc (Acero) produced 55,438 tonne of HRC during the quarter, while JSW Steel Italy produced 68,036 tonne of rolled long products and sold 45,948 tonne. On the progress of its acquisition of Bhushan Power & Steel he said, "NCLAT has given its order from which we have understood that our plan has been approved by the committee of creditors and now we are waiting for the final communication from them.

"Once it is accepted then our resolution plan will be put up to NCLT for approval if there is not further litigations." JSW Steel shares gained 2 percent at Rs 279.30 on the BSE, where the benchmark index rallied 1 percent..