Mumbai: Sajjan Jindal-led JSW Steel on Tuesday reported 44 per cent decline in net profit at Rs 624 crore during the quarter ended June 2017, following flat crude steel production and higher prices of inputs like iron ore, fluxes and power.
The total revenue during the quarter increased sharply by 24 per cent to Rs 15,977 crore, with crude steel production up 1 per cent at 3.91 million tonnes and saleable steel up 5 per cent at 3.51 million tonnes.
The company reported a 44.10 per cent fall in consolidated net profit at Rs.626 crore for the quarter ended June 30, hit by higher expenses. It had posted a net profit of Rs 1,120 crore in the year-ago period.
The operating leverage impact from lower sales volumes and higher prices of inputs like iron ore, fluxes and power led to operating EBITDA for the quarter of Rs 2,617 crore.
"The June quarter domestic sales volume was impacted by industry wide destocking as customers in general adopted a cautious approach towards carrying inventories in run up to GST rollout," JSW Steel joint managing director and group CFO Seshagiri Rao told reporters here.
The company remained focused on enriching the product mix and sales of value added and special products grew by 12 per cent YoY, primarily due to higher volume of electrical steel, CRCA, galvanised and colour coated products, he said.
Exports during the quarter surged by 26 per cent YoY, as demand as well as pricing for steel products in international markets remained buoyant, Rao said. The company plans to invest up to Rs 8,000 crore annually on capacity addition at Dolvi and Vijaynagar units.
The company hopes to add 5 MT capacity through organic growth and looking for acquisition opportunities for an inorganic growth, he said. Commenting on the outlook, Rao said, global steel production grew by 36 mmt in 1HCY17 as against World Steel Association CY2017 estimate for demand growth of 20 mmt.
However, China has positively surprised with a 35 mmt apparent steel demand growth in 1HCY17, driven by fiscal stimulus, against a flattish demand estimate by WSA for CY17.
Global steel demand growth appears to be better than earlier expectations. Steel imports into India, after correcting in April, have again risen to 8 mmt on annualised basis.
Crude steel production in 1QFY18 increased by 3.5 per cent YoY, whereas apparent finished steel consumption in the quarter grew by 4.6 per cent YoY.
The steel demand in the domestic market is improving with increasing public sector spending; reflected in increased activity in sectors like roads, power T&D, solar energy, earthmoving equipment, pre-engineered buildings, and water & gas pipelines.
Steel demand is on track to grow by 5 per cent in FY18; although sluggish private capex remains a concern, Rao said.
