JSW Steel on Friday reported a consolidated net loss of Rs 923 crore for the December quarter, hit by impairment charges of Rs 2,121 crore.
The Sajjan Jindal-led company had clocked a net profit of Rs 329 crore in the year-ago period, it said in a BSE filing.
Total income of the firm fell by 34 per cent to Rs 8,698 crore in the October-December quarter this financial year from Rs 13,223 crore during the same period in 2014-15. The firm's total expenses were, however, lower at Rs 8,580 crore from Rs 11,817 crore during the reported quarter.
"During the quarter, the company recorded impairment charges of Rs 2,121 crore towards fixed assets, goodwill, and other assets comprising of Rs 905 crore for its US operations of plate and pipe mill...," JSW Steel said.
Other charges include "Rs 172 crore for its coal mines operations in the US and Rs 1,045 crore for its iron-ore mines operation in Chile, leading to a downward revision of the carrying value."
The net loss after tax for the quarter was Rs 923 crore, after incorporating the financials of subsidiaries, joint ventures and associates, it added. Its crude steel production fell by 15 per cent to 2.70 million tonnes (mt) during the December quarter in 2015-16 from 3.17 mt in the year-ago period.
Whereas saleable steel sales declined by 16 per cent to 2.55 mt from 3.03 mt during the same period.
On decline in production, the firm said: "Current quarter was marked by planned shutdowns of Blast Furnaces towards relining/modification and capacity expansion at all 3 upstream steel making locations -- Vijayanagar, Dolvi and Salem."
On completion of these low cost and returns accretive projects, the installed capacity of the company will increase by about 25 per cent from 14.3 million tonnes per annum to 18 million tonnes per annum.
Despite lower volumes due to planned shutdowns, the firm reduced share of exports to 12 per cent of total sales (from 29 per cent in the same period last year), and domestic sales volumes grew 8 per cent year-on-year during the quarter.
Increase in retail sales (which grew 82 per cent y-o-y) enabled by strategic expansion of distribution footprint and influencer engagement programmes helped achieve this.
More importantly, the product mix was enriched with value added products accounting for 36 per cent of total sales during the quarter, it added.
On outlook for India, JSW Steel said the overall consumer discretionary spending, public Capex (highways, ports, power transmission, etc) and FDI have continued to improve, supporting a gradual growth recovery. But weaker exports and pick up in private Capex have been a drag.
"India is the only major steel consuming market globally which is still witnessing an increasing demand environment," it added.
Progress on policy reforms, coupled with government's measures to pump prime the economy bode well for steel demand over the medium term, JSW Steel added.
"However, this also makes India an attractive export destination for steel surplus countries. Domestic steel industry continues to suffer from rising imports – especially from China, Japan, and South Korea," it rued.
During the first nine months of 2015-16, consumption of domestically produced steel fell by 1.2 per cent y-o-y as total steel imports surged by 29 per cent y-o-y.
Finished steel exports too decreased by 30 per cent y-o-y in the first 9 months of the current fiscal.
"Indian steel industry is grappling with headwinds of an insipid demand, excess supply and pricing pressure driven by a surge in imports at predatory pricing. This necessitates urgent and adequate measures to check unbridled and unfair imports of steel," it said.
On the global market, the company said global economic outlook remains fragile. Expectations of a pick up in global growth momentum continue to wane as downside risks to growth outlook persists with issues related to slowdown and re-balancing in China.
Global trade imbalances driven by a sharp drop in commodity prices as well as weakening currencies, limited room for further monetary stimulus and uncertainty around monetary tightening by the US Fed.
The global steel demand continues to weaken with lower investment activities and weak manufacturing across most regions. Steel exports from steel-surplus countries (as domestic demand falls faster than production cuts) are at elevated levels.
Predatory prices of exports continue to intensify trade remedial measures across most region, it added.
On its status of its ongoing projects, JSW Steel said the blast furnace at Vijayanagar which underwent a planned shutdown for relining and modification from August 2015 onwards is expected to get commission in Q4 FY'16.
The Blast Furnace at Dolvi and one of the blast furnaces at Salem too went under shutdown for capacity expansion during the quarter and are likely to get commissioned in Q4 FY'16.
Shares of the company today fell by 3.17 per cent to settle at Rs 1,058.50 apiece at the BSE.
