JSW Steel net doubles on lower cost, higher output
JSW Steel’s net profit more than doubled in the March quarter to ₹171 crore against ₹62 crore recorded in the same period last year.
Despite lower realisations, the company managed to improve its profitability largely due to lower cost. Net sales were down 15 per cent at ₹10,471 crore (₹12,364 crore).
Crude steel production was up five per cent at 3.21 million tonnes (mt), while saleable steel output rose 7 per cent at 3.28 mt.
The company announced a dividend of ₹7.50 per equity share and ₹1 a share on cumulative redeemable preference shares.
Seshagiri Rao MVS, Joint Managing Director, said realisations have fallen 17 per cent in line with sharp drop in international steel prices.
The domestic steel prices dipped 33 per cent last fiscal to $260 a tonne from $390 a tonne.
“Implementation of minimum import price is expected to bring down imports to 5-6 mt in FY-17 from 12 mt logged in the previous fiscal and JSW is well poised with incremental capacity of 4 mt going on stream," Rao said.
The company plans to invest ₹3,820 crore in select projects with low payback period.
It will invest ₹650 crore to set up a pipe conveyor system to transport 20 mtpa of iron ore from the yard near the mines to the Vijayanagar plant.
The system, which is an efficient way of transporting iron ore, is expected to be completed in two years.
The company is also building a water reservoir facility at its Vijayanagar plant with investment of ₹520 crore. The project is expected to be commissioned in 26 months. The company’s subsidiary JSW Steel Coated Products is setting up a tin plate mill with investment of ₹650 crore at Tarapur to cater the increasing demand for the tin plate.
It has also revived the first phase of 1.5 mt coke oven plant at Dolvi with an investment of ₹2,000 crore as captive demand for coke is increasing with overall steel-making capacity rising to 18 mtpa.
Last year, the company put the three-million-tonne coke oven project on hold to conserve cash.
JSW expects crude steel production to increase 25 per cent this fiscal to 15.75 mt, while saleable steel output is estimated to grow 24 per cent to 15 mt.
The company’s shares were up 1 per cent at ₹1,310 per share on Wednesday.
source: Hindu Businessline