JSW Steel posts Rs 656 crore profit in Q1
Aug 01 2014 , Mumbai
The company’s net sales grew 29 per cent from a year ago level to Rs 14,153 crore.
Seshagiri Rao, joint managing director, at JSW Steel told reporters in Mumbai the industry is expected to grow to 4-5 per cent in the second quarter of 2014-15 from existing 0.6 per cent. Steel demand is expected to revive from next quarter while raw material prices are expected to remain range bound.
“While second quarter would be sluggish due to the monsoon, demand will pick up in the second half of FY2015. Government’s thrust on infrastructure and affordable housing could fuel a revival in the second half, ’’ Rao added.
Rao said in the quarter the company gained significantly from the improved performance on the back of greater contribution from value-added products which went up from 24 per cent of sales to 29 per cent during the quarter. “We want to take it up to 33 per cent of sales,” said Rao.
Besides value-added products, profitability gains came from commissioning of the Dolvi unit and margins rose due to use of 47 per cent captive coke use and 76 per cent use of captive pellets, despite lower steel prices. This was sustainable as both the products will be completely captive in future, he added.
The company reported EBITDA margin of 19.7 per cent in the quarter compared to 18.3 per cent a year ago.
Crude steel production rose 8 per cent to 3.1 million tonnes and steel sales rose 13 per cent to 2.88 million.
Despite global iron ore prices softening, India continued to suffer from acute shortage of iron ore and there was no benefit of the price drop here. Benefits from a $15 per tonne price drop in coking coal were neutralized by high iron ore prices, he said.
JSW’s 14.3 million tonne capacity would go up by 4 million tonnes by September 2015 when 2 million tonnes each will come up in Dolvi and Vijayanagar.
Earlier, Sajjan Jindal, chairman, JSW said it plans to invest $ 22 billion to take steel capacity to 40 million tonnes by 2025, to maintain its market share at 13-14 per cent.
Sanjay Jain, an analyst at Motilal Oswal said, “The results were above our expectations and the company should be able to continue to sustain its performance in the coming quarters as raw material costs are expected to remain range bound while demand scenario is expected to improve with government’s focus on infrastructure and housing.”