JSW Steel reported a 88 per cent decline in consolidated net profit to Rs 187 crore for the December 2019 quarter, mainly due to lower net sales realisation that pulled down the revenues.
The company had reported a profit after tax (PAT) of Rs 1,603 crore in the corresponding quarter of the previous financial year.
Its consolidated income during the October-December 2019 period was Rs 18,182 crore, registering a fall of 10.6 per cent over the year-ago period.
"2019, especially the July-September quarter, witnessed an adverse impact of global economic slowdown on the steel industry with the production increasing significantly on one hand and prices falling, on the other hand. Similar trend was seen in the second quarter of 2019-20 in India, which was a major setback for domestic steel manufacturers," the company's Joint MD and Group CFO Seshagiri Rao told reporters.
He said the trend continued in October 2019 as well but the situation improved in November and December.
"Because of pressure on margins and supply-side adjustments that happened globally, global prices of steel started picking up from November by USD 70-80 per tonne from the low of USD 420-430 per tonne in October 2019," Rao said.
Expecting a similar trend of price rise in India, the domestic industry felt that the steel prices here will also go up and so they started restocking, which boosted the demand, he said.
"Also, the infrastructure spends by the government during the quarter increased which led to higher demand for steel for construction. Thus, sales improved. However, since the net sales realisation did not improve significantly, the revenues were impacted," he said.
During the quarter, net sales realisations declined seven per cent sequentially and 23 per cent year-on-year.
The company's crude steel production during the October-December 2019 period stood at 4.02 million tonne, up five per cent quarter-on-quarter.
Production in the quarter was lower by five per cent y-o-y due to extended monsoon which impacted operations at both Dolvi and Vijayanagar, a company statement said.
"We have given a guidance of 16.5 million tonne of steel production and 15.5 million tonne of sales for the current fiscal and we maintain it considering the good demand we are witnessing," Rao said.
The company's net debt fell marginally to Rs 49,550 crore at the end of December, while the net debt-to-equity ratio stood at 1.35.
On its capital expenditure plan for the ongoing fiscal, he said, "Major capital expenditure projects have been delayed by 3-6 months, particularly the 5 million tonne per annum Dolvi plant expansion, because of the prolonged monsoon last year. The commissioning date for the Dolvi plant has been pushed from March 2020 to the first half of FY21.
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