Sajjan Jindal-led JSW Steel today reported a multi-fold jump in its consolidated net profit at Rs 1,109 crore for the quarter ended on June 30, 2016.
The firm had clocked a net profit of Rs 21.19 crore in the year-ago period, it said in a BSE filing.
Total consolidated income, however rose marginally by 2 per cent to Rs 12,885.81 crore in April-June this fiscal from Rs 12,647.35 crore during the same quarter in 2015-16.
The firm said crude steel production grew by 14 per cent to 3.87 million tonnes (MT) during the June quarter in 2016-17 from 3.40 MT during the same quarter in 2015-16, while sales grew 8 per cent to 3.34 MT from 3.11 MT during the period.
During the quarter, steel production ramp-up in the industry was ahead of expected demand pick-up in the latter part of the year, JSW Steel said in a statement.
At the same time, domestic apparent demand growth was almost flattish (0.4 per cent y-o-y), it added.
"With strong and remunerative export orders, the company strategically re-focused on the exports sales during the quarter, which grew by 39 per cent y-o-y, cushioning the impact of flattish domestic sales," the firm said.
The company has also been focusing to increase branded and automotive steel products sales. During the quarter, the sales to the automotive sector grew by 16 per cent y-o-y compared to 12 per cent y-o-y growth in the Indian automotive production.
Sales of Branded steel products also increased by 15 per cent year-on-year (y-o-y). Overall, sales of value added and special products sales grew by 4 per cent y-o-y in the quarter, it added.
On outlook, the firm said India's economic growth continues to improve gradually.
"Normal monsoons and 7th Pay Commission awards are likely to drive consumer discretionary spending going forward. However, government's measures to pump prime the economy and progress on various policy reforms are key to drive an uptick in steel demand growth," it added.
In India steel production ramp-up was ahead of expected
demand pick-up - crude steel production increased by 4.8 per cent y-o-y in the June quarter this fiscal, whereas apparent finished steel consumption grew by only 0.4 per cent due to sluggish demand conditions, JSW Steel said.
At the same time, steel imports remained at elevated levels. Imports in March 2016, surged by around 60 per cent. More than 50 per cent of current imports are happening at prices below MIP levels for the respective product category, it added.
Overall imports into India have fallen by only about 1/3rd from the pre-MIP level as against expectations of a 50 per cent drop. Therefore, widening of MIP scope, effective implementation, monitoring and extension of MIP provisions is imperative for the health of the steel industry, it said.
On the global situation, the firm said rising global steel prices in March and April drove a sharp increase in steel production in all major regions during April-June on 2016 calendar year (except Europe and South America).
Global steel capacity utilisation in June 2016 jumped to 71.8 per cent. With surge in production not being supported by underlying demand, prices started declining May onwards, but of late they have firmed up again mainly on restocking demand led by infrastructure and construction sectors in China.
"However the global steel industry continues to face headwinds of weak demand and overcapacity. Exports from steel-surplus countries (like China, Korea and Japan) continue to increase," it said.
In the absence of effective tariff measures, South East Asia, Middle East, Africa and Europe continue to see surge in imports whereas the US is able to clampdown imports with imposition of trade remedial measures, it added.
