Aided by better realizations arising from an improved product mix, JSW Steel, the third-largest steel maker in the country, reported a net profit of Rs. 656.5 core for the first quarter of FY15 ended June 30, 2014. In the year-ago period, it reported a loss of Rs. 381.82 crore.
It reported a 29 per cent jump in net sales at Rs. 13,067.48 crore.
Operating profit rose 39 per cent to Rs. 2,612 crore and significantly, operating margin gained 140 basis points at 19.7 per cent.
At a press conference, Seshagiri Rao, MD & CEO, JSW Steel said the improved performance was 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.’’
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 captive pellets use despite lower steel prices.’’
He said this was sustainable as both the products will be completely captive in future.
Crude steel production rose 8 per cent to 3.1 million tonnes and steel sales rose 13 per cent to 2.88 million.
JSW Steel’s net debt was at Rs. 34,014 crore.
Despite global iron ore prices softening, India continued to suffer from acute shortage 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.
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 (around Rs. 1,32,000 crore) to take steel capacity to 40 million tonnes by 2025, to maintain its market share at 13-14 per cent.
On the outlook, Mr. Rao said 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 housing could fuel a revival in the second half.’’
On the BSE, JSW Steel declined 0.5 per cent to close at Rs. 1,173.95 on Friday.
