JSW Ispat swings to profit in Apr-Jun quarter

Company had reported a net loss of Rs 1,135.13 crore during the corresponding quarter of the last fiscal

JSW Ispat Steel has swung to profit in the April-June quarter this fiscal reporting a net profit of Rs 478.24 crore mainly due to a deferred tax asset of Rs 779.18 crore on its balance sheet.

The company, which follows July-June as its financial year, had reported a net loss of Rs 1,135.13 crore during the corresponding quarter of the last fiscal.

"Deferred tax asset (DTA) of Rs 779.18 crore has been recognised during the year for the period from April 1, 2011 to June 30, 2012 and net DTA as on June 30 stands at Rs 2,087.94 crore," it said in a filing to the BSE.

The company further said that its auditors have expressed their "inability to express an opinion on the recognition of net deferred tax asset of Rs 2,087.94 crore and Rs 1,308.76 crore up to June 30, 2012 and March 31, 2011".

However, due to various measures taken by JSW Ispat for enhancing its operating efficiency and future profitability projections, "the company is virtually certain that there would be sufficient taxable income in future to claim the above tax credit," it said.

Moreover, the company has stopped recognition of additional deferred tax assets from April 1, 2011, it further said.

During the quarter, JSW Ispat's net sales rose by 18.38% to Rs 2,855.37 crore vis-a-vis Rs 2,412.01 crore of the April-June quarter of FY'12.

The company, during the quarter, was also impacted by foreign exchange loss of Rs 188.55 crore and write down of inventory worth Rs 106.67 crore.

For the full year 2011-12, the company managed to narrow down its net loss considerably to Rs 263.64 crore against a net loss of Rs 1,872.29 crore in 2010-11.

Besides, its full year net sales increased by 32.80% to Rs 10,724.12 crore in the last fiscal. However, the company was adversely impacted by host of factors during the year, which includes forex losses of Rs 379 crore.

Yesterday, JSW Steel, the promoter firm of JSW Ispat, had said that it expects the loss-making subsidiary to become profitable by the end of current fiscal and after that, it will initiate the process to merge it with the parent firm (JSW Steel).

Sajjan Jindal-led JSW Steel had acquired a controlling stake in erstwhile Ispat Industries (now JSW Ispat Steel) in December 2010 at an enterprise value of USD 3 billion.

The acquisition had increased JSW's annual production capacity to 14.3 million tonnes (MT) as JSW Ispat runs a 3 MT capacity steel mill at Dolvi, near Mumbai.

Shares of JSW Ispat were being traded at Rs 10.43 apiece on the BSE in the afternoon trade, up 1.96% from the previous close.