 "JSW Steel reports loss of Rs 107 cr in Q1, its first in seven quarters")
The company had last reported a loss in September quarter of 2013. Net sales of the Sajjan Jindal-led company declined 13 per cent on a year-on-year basis to Rs 11,382 crore in the period under review.
The performance was lower-than-expectations as Bloomberg estimates had pegged the net loss at Rs 54.8 crore and revenue at Rs 11,534 crore.
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“Though there was increase in consumption in the Indian market, most of it was taken by the cheaper imports. As a result, domestic steel players lost out on opportunity and inventories built up,” joint managing director and group chief financial officer Seshagiri Rao said at the conference held here on Wednesday.
The company’s per tonne earnings before interest, tax, depreciation and amortisation (Ebitda) for the quarter nearly halved to Rs 4,845 from Rs 8,561 in the same quarter last year.
“This was the lowest Ebitda per tonne reported by JSW Steel since 2008,”said Rao.
Nevertheless, Ebitda at Rs 1,627 crore was much better than Street expectations of Rs 1,583 crore, from Bloomberg estimates.
Being a non-integrated player on the domestic front, the company is benefiting because of lower raw material costs as that of coal and iron-ore. While NMDC has been cutting iron-ore prices imported coal prices too are substantially lower. The management said its global subsidiaries showed negative earnings clearly indicating the problem lay abroad rather than domestic operations.
“Our Chile mines are shut for maintanence, and plates and pipes mills has reported a negative EBITDA. Going ahead too, seeing the overall scenario for the industry in the global market, we do not expect much improvement at these operations in the near future,” Rao said.
In the domestic market, the company strategically reduced share of exports to 14% of total sales from 27% a year ago and despite the increased imports, saw its domestic sales volume grow a robust 27% year-on-year to 2.66 million tonne. In the value added segment, the company has increased its share to 35% of total sales in the quarter gone by from 25% a year ago and 33% in the preceding quarter.
Going ahead the company plans to focus on its retail segment where it is seeing a higher traction.
"Our retail sales rose 27% sequentially and by 77% on a year-on-year basis. So going ahead we will reduce focus on exports and divert the volume towards retail," said the management. “We will be focusing on brand building and have also increased dealership by 950 in the last quarter to penetrate deeper in the rural areas,”said Jayant Acharya, director commercial at JSW Steel.
The company also plans to lower its interest cost and will be refinancing debt of Rs 2,700 crore, said Rao.
JSW Steel is focussing on brownfield expansion for now, given the weak business environment right. It will spend Rs 9,000 crore in two years to expand steelmaking capacity to 18 million tonne from 14.3 million tonne.
The results that came just a few minutes before the market closed, saw the stock close nearly flat at Rs 812.50 on the BSE.