JSW Steel reports net profit of Rs 127.12 crs in Q2

New Delhi: JSW Steel Limited reported net profit of Rs.127.12 crores for second quarter of FY12, on standalone basis. The company stated that its profit would have been much higher had the production not cut due to severe iron ore shortage and also the forex translation losses of Rs 512.98 crores due to adverse movement in rupee dollar parity.

The turnover and net sales for the quarter stood at Rs 8,242.55 crores and Rs 7,625.06 crores, respectively, showing a growth of 33 per cent over the corresponding quarter of the previous year, mainly due to higher volume and improved sales realization. The EBIDTA for the quarter is Rs 1,332.95 crores up by 15 per cent over the corresponding quarter of the previous year. The company has posted a net profit after tax of Rs 127.12 crores after considering foreign exchange translation losses.
During the current quarter, company achieved production of crude steel of 1.738 million tonnes. Production volume grew by 11 per cent in crude steel, 2 per cent in rolled flat products and 30 per cent in rolled long products relative to that of corresponding quarter of the previous year.
Company’s production was lower at least by 4,50,000 tonnes due to acute shortage of iron ore and higher procurement cost of iron ore also increased the cost of production of steel by about Rs 1500 per tonne during the quarter.
It achieved quarterly sales volume of 1.882 million tonnes, 19 per cent growth in sales volume and 33 per cent in Net sales value, compared to that of corresponding quarter of the previous year.
The Company has been facing for the past few months severe shortage of Iron ore due to banning of Iron-ore mining in the State of Karnataka by the Honorable Supreme Court of India. This problem of acute shortage of Iron-ore was further accentuated in Sept.'2011 when there was delay in the implementation of the Honorable Supreme Court’s directive to make available Iron-ore to the Steel Companies from stock piles and NMDC production through E Auction. This led to a steep drop of 28 per cent in crude steel production in Sept.'2011 as compared to August'11, as the Company cut down its production at Vijayanagar Works to 30 per cent in the last week of Sept.'2011
The Company’s Vijayanagar Works secured 1.924 million tonnes and Salem Works secured 0.156 million tonnes of Iron-ore in the E Auctions conducted so far by the ‘Monitoring Committee; against which the Iron ore received at site is only around 18 per cent of total material procured by Vijayanagar Works in E-Auctions. The Company is yet to improve capacity utilization significantly from existing levels as the receipt of E-Auction material is taking considerably longer time due to procedural delays and logistical constraints.