JSW Steel Q2 net jumps 150%; firm plans Rs5,000cr rights issue

JSW Steel Thursday reported over 150 per cent year-on-year rise in consolidated net profit at Rs 2,087 crore in September quarter on the back of strong growth in production and sales and higher steel prices.

The company's board has also okayed a proposal for raising up to Rs 5,000 crore through rights issue to strengthen its balance sheet.

"The company reported more than 6 per cent growth in crude steel production at 4.18 million tonnes (mt) in Q2FY19 due to higher capacity utilisation at its Vijayanagar and Salem works," JSW Steel joint managing director and group chief financial officer Seshagiri Rao told reporters here.

Consolidated saleable steel sales stood at 3.91 mt during the quarter, driven by 14 per cent rise in offtake from original equipment manufacturers (OEM) and favourable international markets, he added.

The firm's total income increased to Rs 21,608 crore, from Rs 17,279 crore in the year-ago period, while total expenses also swelled to Rs 18,583 crore, against Rs 16,005 crore in the corresponding period of the previous fiscal.

Revenue from operations grew by 25 per cent at Rs 21,552 crore, primarily driven by higher steel prices, according to Rao.

Operating EBITDA surged by 64 per cent to Rs 4,802 crore and EBITDA margin stood at 24.4 per cent despite an increase in costs of key inputs like iron ore, coal, energy prices, electrodes, refractories and ferro alloys, he added.

Net debt rose to Rs 44,919 crore, against Rs 39,090 crore in the year-ago period, mainly due to consummation of the previously announced acquisitions, increase in working capital due to higher volumes and prices, and impact of currency depreciation, he said.

Rao said the company's balance sheet continues to remain strong.

The company's both domestic as well as overseas subsidiaries did well in the September quarter.

A consortium of JSW Steel and AION Investments has completed the acquisition of Monnet Ispat & Energy (MIEL) through their joint venture Creixent Special Steels in August this year. Consequently, MIEL has become a joint venture of the company.

It has also completed the acquisition of two European firms by JSW Steel Italy, he said.

Going forward, Rao said, the company is hopeful of commissioning coke oven plant of 1.5 mtpa at Dolvi and tin plate unit with a capacity of 0.25 mtpa at Tarapur during December quarter.

With the objective of simplifying the corporate structure and enhancing operating efficiencies, the board of directors approved the scheme of amalgamation for the merger of its wholly owned subsidiaries, Dolvi Minerals and Metals Private, Dolvi Coke Projects, JSW Steel Processing Centres and JSW Steel (Salav) with JSW Steel.

Rao said the company is in the midst of implementing and pursuing multiple organic as well as inorganic growth opportunities.

With the objective of further strengthening the balance sheet of the company, the board has accorded an in-principle approval for a rights issue of up to Rs 5,000 crore, which will be finalised at a later date, he said.

Replying to a query on Essar Steel acquisition, Rao said, "We are not permitted to bid solo, but we are still interested in bidding for Essar Steel assets. The Bhushan Power and Steel matter is sub-judice and the court has to decide on that. Once CoC (committee of creditors) and court decide, we will take a call."