JSW Steel has reported a 21% increase in its second quarter consolidated net profit to ₹2,536 crore due to deferred tax reversals during the quarter.
The rise in profit came despite an 18% fall in revenue to ₹17,572 crore due to a 9% fall in steel sales to 3.56 million tonnes.
Deferred tax writeback
“Two subsidiaries of the company — JSW Colour Coated and JSW Industrial Gases — have moved to the new tax regime of 25% and enabled a deferred tax writeback of ₹1,976 crore during the quarter,” MVS Seshagiri Rao, Joint MD and Group CFO, JSW Steel, said.
The company has decided to continue with its existing minimum alternate tax (MAT) regime and reverse its deferred tax provisions over the coming quarters instead of switching to the new corporate income tax structure that the government introduced from this fiscal. Operating EBITDA during the quarter fell 44% to ₹2,731 crore while margin was down 720 bps at 15.5%.
Given the sharp fall in demand and weak sentiments, the company has cut its planned capital expenditure by ₹4,700 crore for this fiscal to ₹11,000 crore from ₹15,700 crore.
“In light of the prevailing market conditions, the company has recalibrated the capital expenditure plan of FY2020.,” the company said in a statement.
