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| JSL marches towards profit path amid dumping threat |
| Press Trust of India / New Delhi Jul 28, 2009, 21:45 IST |
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Buoyed by the improvement in demand for its products, stainless steel maker JSL today reported an over three-fold jump in its net profit at Rs 94.76 crore for the first quarter ended June 30, over the same period a year ago.
However, the country's largest producer of the alloy said that the threat of cheaper imports from the European countries looms large and if the trend continues the coming quarters can become "challenging".
"Besides, the increase in demand from the consuming sectors, our production increased 66 per cent, sales rose 31 per cent, change in the product mix and cost optimisation led us to the path of profit in the fiscal," JSL Director (Strategy & Business Development) Arvind Parakh told PTI.
The company had incurred losses in the past two quarters.
However, lower sales realisation due to sharp correction in the rates of the alloy led to a 13 per cent fall in the total income of the company to Rs 1,347.28 crore.
The company says the coming quarters can be challenging if the inflow of the cheaper variant is not discouraged. The alloy attracts 25 per cent anti-dumping duty at present.
"The anti-dumping duty was applicable on the imported cold-rolled coil with a width of 600 mm or above. By splitting the standard specification into two, foreign firms continue to dump the alloy. The government has to take urgent safeguard and anti-dumping measures," he said.
If the measures are not taken soon, Parakh said, the company would have to employ more cost-cutting measures which may threaten jobs, productivity, besides the Corporate Debt Restructuring (CDR) it is going to undertake.
Meanwhile, the company said its board has approved a provision to raise $150 million (about Rs 722 crore) through the issue of shares, a $50 million increase from the last stated amount.
Parakh said the amount could be raised by way of issue of FCCBs, GDRs or ADRs or may also go for rights issue to raise Rs 500 crore or issuance of equity shares to qualified institutional buyers through qualified institutional placement up to an aggregate amount of Rs 750 Crore. The company will employ any one of the stated mode to raise funds, he said.
"The fund to be raised would part finance the Rs 5,600 crore second phase of the expansion of our Orissa project in which we will set up an 8 lakh tonnes of stainless steel plant," he added.
Currently, the company has a capacity to produce 7 lakh tonnes of the alloy at Hissar in Haryana.
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