JSPL's Q1 net loss doubles; to sell assets, enters const biz

Jindal Steel and Power (JSPL) today said its net loss on a consolidated basis doubled to Rs 1,042.15 crore for the June quarter, mainly due to tepid sales and higher costs.
Its consolidated net loss stood at Rs 542.42 crore in the corresponding period of the previous fiscal.
Total consolidated income was higher at Rs 4,655.45 crore in April-June quarter from Rs 4,405.73 crore during the same period of 2015-16, but expenses too climbed to Rs 4,588.48 crore from Rs 4,392.58 crore earlier.
The Naveen Jindal-led firm said it is foraying into the construction and roads segment as it explores options to come out of the red, besides selling non-core assets.

JSPL's Group CEO Ravi Uppal said: "Steel demand has been subdued in June quarter. Also the increase in prices post-MIP (minimum import price) has come down, which further impacted the performance."
Also, the company's Angul plant was shut down for around 6 weeks for repair and maintenance, he added.

"However, our pellet business has done very well. Both sales and production grew in April-June and our exports were also up," Uppal noted.
On the power business, he said demand was less on account of excess supply and rains in May.
But the company expects the situation to improve in anticipation of a pick up in industrial activity in the third and fourth quarters of 2016-17, he added.

In a bid to pare its huge debt, JSPL said it is in "constant discussion with its lenders in India and overseas for restructuring and financing".
"Simultaneously, the company is focused on reducing its debt through higher cash generation from its operations and divestment of non-core assets," it added.
JSPL has a net debt of around Rs 46,000 crore.
"Increased fuel and finance costs due to borrowing for payment of additional coal levy over Rs 3,300 crore arising out of cancellation of coal blocks by Supreme Court of India and lower steel prices continued to contribute to loss in financial results," it said in a regulatory filing.

On sales, the firm said the June quarter saw a "tepid growth" in domestic steel demand (0.4 per cent year-on-year), which under-paced the production ramp up during the quarter.
"Impact was more pronounced in long products segment as the orders declined with onset of monsoons. Against industry's expectations of import substitution driving good growth in the quarter after imposition of the MIP, imports from China, Korea and Japan fell only by a third," it added.
The company reported a production of 1.2 million tonnes (MT). Sales in the June quarter stood at 1.1 MT, a growth of almost 6 per cent.

JSPL also announced its foray into the construction business, which it said has started yielding results. The company said it has bagged key building projects across India.
"During the quarter, the business secured orders for supplying steel for multi-level parking, high-rise buildings and airports. JSPL is now looking forward to foray into road construction, flyovers and bridge segment," it added.