Jindal Stainless reports Q2 profit at Rs 52 crore

Jindal Stainless Ltd (JSL) has reported a profit after tax of Rs 52 crore in the second quarter (July to September) of current fiscal year as against a loss of Rs 36 crore in Q2 FY19.

The company clocked standalone net revenue of Rs 3,170 crore compared to Rs 3,068 crore in the same period. Sales volume during the quarter stood at 2.33 lakh, increasing by 13 per cent over the corresponding period last year.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for Q2 FY20 was recorded at Rs 317 crore. On a sequential quarter basis, EBITDA and revenue remained nearly flat with the company striving to improve product mix and optimise costs.

The net interest during the quarter ended September 30 fell by Rs 14 crore over the corresponding period last year. Exceptional gain in Q2 FY20 was recorded at Rs 7 crore as against a loss of Rs 53 crore in Q2 FY19.

"Despite moderate business sentiment, JSL was able to maintain a steady performance through consistent improvement in operational parameters and internal cost efficiencies," said Managing Director Abhyuday Jindal.

"A weak global outlook was compounded by soaring imports from Indonesia over the last few months, adding pressure on margins. Even though the government's decision to withdraw from Regional Comprehensive Economic Partnership (RCEP) is a welcome move, it is not adequate to keep the domestic industry at the same level as its global peers," he said in a statement.

Jindal said JSL has sensitised the government about other imminent issues plaguing the industry, and look forward to more such steps in the future.

The quarter witnessed steep volatility in alloy prices. Nickel price increased sharply whereas ferro-chrome and mild steel scrap prices fell during the quarter, neutralising the raw material fluctuation on inventory valuation.

The company said margins remained under pressure due to the challenging macroeconomic situation and surge in imports during Q2 FY20. Total import from Indonesia in Q2 FY20 stood at about 1.4 lakh tonnes, marking a 16x growth over the corresponding period last year which was over 8,000 tonnes.

This adversely impacted the domestic manufacturing sector, corresponding employment generation and market prices, said JSL.

This has necessitated the immediate need for review of existing free trade agreements (FTAs), and the industry has sought government intervention with trade remedial measures to check disproportionate imports into the country at a time when all other nations have safeguarded their own turfs.