JSW Steel, the country's third largest steel producer, posted an 11 per cent rise in net profit for the fourth quarter ended March 31, 2008 at Rs 461 crore as against Rs 413 crore in the corresponding quarter last year.
The quarter saw the merger of the full years' results of Southern Iron and Steel Company (Siscol) and JSW Steel following the Bombay High Court's approval of the amalgamation of the companies and, hence, the results are not comparable, a company release said.
JSW's net sales for the quarter were up 68 per cent at Rs 4,189 crore as compared with Rs 2,486 crore.
Despite a robust growth in JSW's net turnover during the quarter, the reduction in prices due to government pressure in an effort to ease inflation, led to a nominal increase in the company's bottomline.
Sajjan Jindal, vice-chairman and managing director, JSW Steel, said, "The EBIDTA squeeze was felt in the last quarter even as net sales grew robustly. All steel players decided to moderate price increases and absorb the raw material costs."
JSW's standalone net profit (including Siscol numbers) for FY08 stood at Rs 1,728 crore, up 33 per cent as compared with Rs 1,292 crore in FY07. Net sales for the year stood at Rs 11,420 crore as against Rs 8,699 crore.
"There will be a substantial squeeze on our EBIDTA margins for the rest of this year but we will try to mitigate it by expanding our capacity. During the year, we will try to increase volume growth, improve the product mix and operational efficiency and also integrate raw material usage. Our iron ore mine in Chile will be operational by 2009," said Jindal.
Due to duties levied by the government on exports to cool-off surging domestic steel prices, JSW will bring down its exports by as much 10-15 per cent of total sales from 26 per cent currently or 948,000 tonnes. However, an executive declined to elaborate on the company's move if the government decides to slash duties during the year.
The company, however, is bullish on the expected demand from the domestic market for steel.
The company's shares closed down 1.90 per cent at Rs 898.65 on the Bombay Stock Exchange (BSE) today.
Century Textiles FY08 net up 2.43%
Century Textiles and Industries, part of the BK Birla Group, posted a 2.43 per cent rise in net profit for the year ended March 2008 at Rs 279.43 crore compared with Rs 272.81 crore last year. Net sales stood at Rs 3,442.61 crore (Rs 3,140.16 crore), up 9.63 per cent.
Better performance of the cement and pulp & paper divisions were the driving force behind the company's improved profitability.
The company has decided to develop land at its Worli textile unit in Mumbai for commercial purposes. In a statement, the company said that the land would be used for hospitality, information technology and IT-enabled services.
The company has 30 acres of land at Worli. Of this, 10 acres are owned by the Wadia group. The Birlas have the right to use the land on lease for 999 years.
R K Dalmiya, president, Century Textiles and Industries, told Business Standard, "We are in talks with players in the hospitality sector and, in two months, a deal will be finalised."
He said negotiations with IT players would follow a deal with hospitality players coming good.
The Birla group has earmarked an investment of Rs 1,800 crore for the cement division to take annual capacity close to 12 million tonnes per annum (mtpa) in three years, from 7.8 mtpa currently.
The company's share price closed down 3.41 per cent at Rs 842.20 on the Bombay Stock Exchange today.
Murugappa FY08 net down 13%
Diversified conglomerate Murugappa Group has reported a 13 per cent drop in net profit to Rs 535 crore in FY08 even as its turnover grew by 15.5 per cent to Rs 9,600 crore.
The Chennai-based group will invest approximately Rs 1,300 crore every year until 2010 to achieve a group turnover of $3.5 billion (Rs 14,000 crore). Investments will be made in sugar, fertilisers, abrasives, distilleries, co-generation and tube products business of the $2.4-billion (Rs 9,600 crore) group.
The group plans to diversify further into rural retail (mostly to market its own products) and life sciences. Presenting the group's financial performance, A Vellayan, vice-chairman and director (strategy) said the group hoped to recover some ground in the current financial year.
"For a group of our size, we expected to grow three times the country's GDP growth rate, which would be 24 per cent. In the current year, we hope to grow by 20 per cent," he said.
N Srinivasan, the group's financial director, explained that drop in the net profit was due to extraordinary income of Rs 197 crore reported in the previous financial year on account of realisation of some investments. In terms of margins (EBIDTA), the group reported a growth of 17.4 per cent to Rs 1,075 crore.
The two major laggards that pulled down the group's EBIDTA were its sugar company EID Parry and tubes and cycle making company, Tube Investments.
A downturn in the sugar industry and rising cost of steel were cited as the reasons for the poor performance of the group companies. The group's plans to sell the mutual fund business have been abandoned with strategies to revive the business in place.
Vellayan said that the expansion and diversifications would be funded from a mix of internal accruals and debt.
"You create a need in the urban market, whereas in the rural area you satisfy the need," Vellayan added. In the life sciences space, the group will look at active ingredients and products.
