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JSW Steel Ltd’s net profit tumbled to Rs 101.25 crore in the quarter ended September mainly because of the foreign exchange loss reported due to the relentless fall in rupee against the dollar.
The company’s PAT in the corresponding period last year was at Rs 822.26 crore.
The 5.4% drop in rupee against the dollar led to a foreign exchange loss
worth Rs 839.38 crore in the period under review.
“This is the last quarter to see the exceptional loss since we (JSW Steel) are totally hedged now and so going forward our (the company’s) hedging cost will be zero,” Joint Managing Director and Group Chief Financial Officer Seshagiri Rao said at the earnings conference here today.
As per market expectations, the rupee did play a crucial role in the earnings of the metal company helping the topline to swell to Rs 11,308.25 crore in the period under review as against Rs 8,833.73 crore in the corresponding period last year.
Exports have contributed significantly to the topline of the company and since rupee had depreciated during the quarter, it has been beneficial, said Rao.
On a consolidated basis, JSW Steel exported 840,000 tn steel during the quarter. For the current fiscal, the company has set a target of 3 mln tn for export of steel products.
Export demand during the quarter was mainly driven by the US, South East Asia and Europe, said Jayant Acharya, director - commercial and marketing.
The company’s consolidated results are comparable only sequentially since the results of corresponding period last year does not include earnings from JSW Ispat Ltd.
JSW Ispat Ltd, which was acquired in 2011 saw its merger into JSW Steel become effective from Jun 1, 2013.
JSW Steel reported a consolidated loss of Rs 115.55 crore in Jul-Sep, lower than the loss worth Rs 381.82 crore noted in Apr-Jun.
The company’s net sales during the quarter were at Rs 12,796 crore, up from Rs 10,141 crore from previous quarter.
Total expenses of Rs 11,438 crore during Jul-Sep showed that company’s operating profit was higher compared with perious quarter mainly due to contribution from JSW Steel’s subsidiaries and joint ventures, said the company.
Going ahead, the company’s operational performance is seen up on the back of higher volumes, better product mix and improved efficiences, said Rao.
As on Sep 30, the company’s net debt stood at Rs 30,435 crore, of which 39% is the foreign loan.
JSW Steel is now looking to refinance its loan and plans to increase the rupee-dollar-loan ratio to 50:50, said the Group CFO. The company will raise $600 mln via ECB (External Commercial Borrowing) , convert it to rupee and repay some portion of rupee debt. This way, the company’s rupee debt will come down and that of dollar will go up, making it an almost equal ratio.
Of the total capex of Rs 550 crore earmarked for the current financial year, JSW Steel has so far spent Rs 250 crore and will be utilising the balance during Oct-Mar, said Rao.
Relining and capacity enhancement of one of its Corex furnaces at Vijaynagar plant in Karnataka, blast furnace gas utilisation at captive power plant and mill scale briquetting unit also at Karnataka plant were some of the new commissionings in Jul-Sep.
Regarding project status, JSW Steel remains optmistic about some, while for others has chalked out plans.
The management is hopeful that commissioning of JSW Ispat’s coke oven and pellet unit at Dolvi, in Maharashtra will contribute in a huge way to JSW Steel’s consolidated earnings in coming quarters.
The pellet plant and coke oven unit at Dolvi is scheduled to come onstream in the current quarter.
At Jharkhand, where JSW Steel plans to set up 10 mln tn greenfield plant needs the stage-2 clearance, said Rao.
At West Bengal, where another 10-mln-tn steel plant has been planned, Rao said that the iron ore is not available in the state and so the company is in discussion to procure the raw material from other state. “We are hopeful of the West Bengal plant,” he said.
For the US’plates and pipes mill, JSW Steel said the unit’s plates utilisation stood at 37% in Jul-Sep quarter, while that of pipes mill was 6%. The plant reported an EBITDA loss of $2.05 million in the quarter. Due to this, the company is now looking to improve its revenue from pipes mill and has bidded for several projects in the US to improve the plant utilisation.
JSW Steel stays positive on steel prices and is of the view that prices will remain stable going ahead with bias being positive.
