Jindal Strips Net Slides 40 Per Cent

Jindal Strips Ltd one of the largest manufacturers of stainless steel in the country, has reported a 40 per cent drop in net profit to Rs 54.89 crore in 1996-97 from Rs 92.42 crore in 1995-96, under the combined impact of minimum alternate tax, higher interest charges.

During the year the company's gross sales also declined by 10 per cent to Rs 1023.4 crore from Rs 1139 crore in the previous year. The gross profit before interest and depreciation dipped by 2 per cent to Rs 164.76 crore during the year, against Rs 168.95 crore in the previous year.

The company's board met on May 31 to approve the results for the financial year 1996-97.

 

The high cost of borrowings by the company on long-term and short-term debt increased interest costs by 66 per cent to Rs 60.9 crore from Rs 36.57 crore in 1995-96.

Depreciation charges went up by 16.7 per cent to reach Rs 60.12 crore from Rs 50.03 crore in 1995-96.

According to JSL's managing director Ratan Jindal, the substantial drop in the company's profitability have been primarily due to a sluggish domestic demand for steel and cheap imports.

The reduction in import duties on stainless steel slabs and a recession in the world steel market has seen imports of stainless steel slabs flooding the domestic market.

In addition to this, a number of major European steel producers resorted to de-stocking.

Moreover, the turnover has been low due to shut downs taken at Hissar unit for modernisation, renovation and upgradation of its existing production facilities.

The profits would have dipped further had it not been for a 100 per cent self-sufficiency in power at each of its manufacturing units at Raigarh, Hissar and Vasind which led to substantial savings in power costs last year.

During the year JSL had to redeem $ 32.34 million out of a total outstanding of $ 50.5 million Euro convertible bonds, as bondholders exercised the put option on the 1993 issue.

JSL is the only private sector player to have integrated facilities for the manufacture of stainless steel. Its principal business is the manufacture of stainless steel and mild steel cold rolled coils.

It also manufactures mild steel slabs and hot-rolled mild steel coils and sponge iron.

JSL plans to increase the production of high value added blade steel, of which it is the only manufacturer from its current level of 3,000 tonnes.