JSW Ispat Q2 profit at Rs 122.39 cr

JSW Ispat Steel today reported a standalone net profit of Rs 122.39 crore for the quarter ended September 30, 2012, largely on account of forex gains and recovery of some pending dues.

The company, which will be merged into JSW Steel after regulatory and shareholders approval, had reported a net loss of Rs 345.30 crore during the July-September quarter of 2011-12.

Net sales of the company was marginally down to Rs 2,547 crore during the quarter vis-a-vis a net sales of Rs 2,584.14 crore of corresponding quarter of the previous year, it said in a filing to the BSE.

During the quarter, the company made a forex gain of Rs 158.13 crore due to rupee appreciation against US dollar.

Besides, it also received Rs 104.83 crore from a stevedoring agent against an inventory lying overseas, it said in the filing.

The company's auditor, S R Batliboi & Co, however, said JSW Ispat has recognised net deferred tax asset of Rs 2,110.87 crore on unabsorbed depreciation and brought forward business losses up to September 30, based on future profitability projections made by the management.

The auditor said that this "does not meet the criteria of virtual certainty in terms of Accounting Standards 22, 'Accounting for Taxes on Income'."

"Had the impact of above item been considered, the loss for the quarter would have been Rs 1,988.48 crore instead of the reported net profit of Rs 122.39 crore," the auditor said.

Commenting on the auditor's observation, the company said in the filing that it has taken various measures to enhance operating efficiency and is "virtually certain that there would be sufficient taxable income in future to claim the above tax credit".

The company also said that it is in the process of seeking approvals from its shareholders and various regulatory authorities for its merger with JSW Steel.

Shares of JSW Ispat today fell by 0.10% to close at Rs 9.90 apiece on the BSE.