Sajjan Jindal-led JSW Steel on Friday reported a steep 87.42 per cent decline in consolidated net profit to Rs 188 crore for January-March 2020 mainly due to lower sales and a one-time impairmentprovision.
The company had clocked a net profit of Rs 1,495 crore in the corresponding quarter of the last fiscal.
Its consolidated total revenue from operations during theJanuary-March quarter also declined to Rs 17,887 crore from Rs 22,368 crore in the last quarter of the previous fiscal.
"The fourth quarter performance was marked by the emergence of the COVID-19 pandemic and measures to curb its rapid spread. The Indian economy was severely impacted by the temporary closure of economic activities across the country after the announcement of the first phase of nationwide lockdown in the last week of March," the company said in a statement.
Also, with a significant supply chain disruption and to ensure safety of the workforce across all areas of operations, the company scaled down or suspended production across all facilities around this time period, it said.
During the quarter, thecompany made animpairment provision of Rs725 crore for the iron ore mining operations at Chile and Rs80 crore towards retirement of certain fixed assets in India in its consolidated results.
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"As a result the PAT for the quarter was Rs188 crore, after incorporating the financials of subsidiaries, joint ventures and associates," the company said.
During the quarter, its saleable steel sales stood at 3.65 million tonnes, down by 15 per cent. While the domestic sales were lower by 5 per cent, exports werelower by 51 per cent, year-on-year.
For the whole year FY2020, the company's total revenue from operations declined to Rs73,326 crore from Rs 84,757 crore in FY2019, while the consolidatedPAT for the year fell to Rs 3,919 crore from Rs 7,524 crore in 2018-19.
"Last fiscalturned out to be a year of two halves for the steel industry - with a weakened demand and subdued pricing environment in the first half of the year, and an improving business and consumer sentiment, with higher demand and pricing, during the second half of the year, deflated largely by the impact of COVID-19, especially, towards the end of March 2020," the company said.
In this backdrop, the company reported crude steel production of 16.06 million tonne for FY2020, lower by 4 per cent YoY, as the average capacity utilization levels reached 89 per cent.
"Despite all the macroeconomic headwinds and operational challenges, the company has achieved 97.3 per cent of its crude steel production guidance of 16.50 MTPA for FY2020," it said.
The company's saleable steel sales volumes for the year stood at 15.08 million tonnes, lower by 4 per cent YoY, achieving 97.3 per cent of its guidance of 15.5 MTPA. Consolidated sales volume stood at 14.90 million tonnes, lower by 4 per cent YoY of 15.6 million tonnes.
JSW exported 3.12 million tonnes of steel in FY2020, an increase of 30 per cent YoY and exports accounted for 21 per cent of total sales, compared to 15 per cent in FY2019.
On the outlook for the sector, the company said, "Indian crude steel production declined 1.5 per cent during the year and finished steel consumption grew by 1.4 per cent in FY20.
"While there are headwinds in the domestic markets, but the likely supply side adjustments and elevated levels of exports should partially mitigate the weaker domestic demand. A gradual recovery in domestic demand is expected in the second half of FY2021."
India's annual consumption of steel is now 100 million tonne, given the large market size it attracts steel tonnages from various countries notably FTA nations (South Korea, Japan, ASEAN).
"Currently about 64 per cent of steel imports originate from the FTA countries where the import duty is nil. This is a source of risk to the health of the domestic steel industry necessitating close monitoring and effective remedial measures," it added.
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