JSW Steel Q2 net dips 71% to Rs 127 cr

JSW Steel's net profit plunged over 71% to Rs 127 crore in the July-September quarter this fiscal due to foreign exchange losses and higher outgo on raw material.

The company, whose Board today appointed Sajjan Jindal as its Chairman after his mother Savitri Devi stepped down as Chairperson, had recorded Rs 445.44 crore net profit during the same quarter a year ago, it said in a statement.

"The profit would have been much higher had the production not been cut due to severe iron ore shortage and forex losses of Rs 512.98 crore due to adverse movement in rupee dollar parity," JSW Steel said.

The Karnataka-based steel maker said that due to the shortage of iron ore on account of the Supreme Court ban on mining in the state, its production was lower by 4.5 lakh tonnes during the quarter.

Higher iron ore procurement cost also inflated its cost of production by Rs 1,500 a tonne during the quarter, it said.

Despite that, the company sold 1.882 million tonne steel during the July-September quarter of this fiscal, clocking around 19% growth. This yielded 33% growth in net sales value over the corresponding quarter last fiscal.

Net sales of the company during the reporting quarter rose to Rs 7,625.06 crore. JSW Steel attributed the growth to higher volume and improved sales realisation.

Production of the company was up by 11% to 1.738 million tonnes during the reporting quarter over 1.571 million tonnes a year ago.

JSW Steel said its production in September this year was down by 28% compared to August as it had to bring down production at Vijaynagar facility to 30% in the last week of the month. It consumed raw material worth Rs 5,083.55 crore during the quarter over Rs 3,373.37 crore a year ago.

The company said that growing economic uncertainty and high inflationary pressure had resulted in marginalising the investment and consumption expenditure leading to a moderation in demand.

"This could result into correction of commodity and asset prices including food, oil, bullion, stock markets, metals and global trade," it said.

Considering the iron ore shortage, JSW Steel reduced its guidance for both production and sales by 14% and 13% to 7.5 million tones and and 7.8 million tonnes, respectively.

However, it said that coking coal, iron ore and scrap prices were expected to moderate, benefiting demand for steel and resulting into improving margins of the steel makers.

Meanwhile, the company's Chairperson Savitri Devi Jindal has stepped down from the Board due to "pre-occupation", but she would continue in the company as "Chairperson Emeritus".

Sajjan Jindal has been promoted as Chairman of the company. He was earlier serving as Vice-Chairman of the steel making firm.