"This (profits) is possible because of reduced operating cost of production," JVSL executive vice-chairman S K Gupta said. JVSL became the first integrated steel project to make a marginal net profit during the first quarter (Rs 25.4 crore) after incurring losses since it partially went on stream. The steel plant is based on Corex oxygen iron-making technology.
Gupta said in the second quarter, JVSL is expected to make a net profit of around Rs 30 crore, in the third quarter, around Rs 45 crore but a net loss of Rs 25 crore during the last quarter.
The fourth quarter loss is because of capitalisation of Corex, oxygen steel making and continuous casting integrated operation.
Gupta said that there has been over 100 per cent capacity utilisation compared with the average of around 60-70 per cent during the first year of operation. He also said that the specific consumption of coal and power had also come down.
Gupta also said that hot metal production had gone upto 0.66 million tonne compared with 0.5 million tonne at Posco, of South Korea and 0.46 million tonne at Saldana in South Africa in their first year of operations. Both these companies are among the leading steel producers in the world.
"We identified around 200 points which needed to be tightened," Gupta said. He said the production of hot rolled coil is expected to exceed 1 million tonne during 2000-01 where as the integrated steel's capacity is around 0.8 million tonne. The company's turnover is expected to be around Rs 1,766 crore.
In another development, JVSL board is seeking shareholders' approval to raise $125 million through the issue of an American/ global depositary receipts (ADR/ GDR). The pricing of the international issue will be based on a free market pricing and may be at a premium or discount to market price in accordance with international practice.
The current shareholding of the proposed allottees is as follows: Indian financial institutions-8.57 per cent, banks-0.15 per cent, mutual funds-1.09 per cent, non resident Indians-4.99 per cent, overseas corporate bodies-1.42 per cent, corporate bodies-1.87 per cent and foreign institutional investors-1.27 per cent and the rest is with the promoters.
The company has also sought shareholders' approval for issue of preferential shares worth Rs 404.33 crore to the promoters which includes, Jindal Iron & Steel Company Ltd, Jindal Strips Ltd and Saw Pipes Ltd and associates.
The shareholders' approval is also being sought for raising funds for the execution of the second phase of the project. However, the total value of the securities proposed shall not exceed Rs 700 crore.
