JSW Steel has reported consolidated net profit of Rs.117 crore for the quarter ended September 30, 2015, compared to Rs.748.7 crore for the same period last year, down 84 per cent.
This was primarily due to pricing pressure on account of dumping of steel in India at discounted prices and drop in demand, a top company official said. During the period the company’s total income decreased to Rs.10,946 crore from Rs.13,921 crore for the same period last year, down 21 per cent. On a standalone basis the company has posted a net profit of Rs.241 crore compared to Rs.762 crore for the same period last year. Total income has decreased to Rs.9,871 crore from Rs.12,173 crore for the same period last year.
“The Indian steel industry continues to suffer from uncontrolled imports at prices significantly lower than domestic prices in exporting countries — especially from Korea, Japan and China. We were impacted by this,” said Seshagiri Rao, Joint MD and Group CFO, JSW Steel.
“The consumption of domestically produced steel was down by 2.3 per cent year-on-year in the first half of this year as total steel imports were up by 42 per cent year-on-year,” he added.
Finished steel exports also decreased by 26 per cent year-on-year in the first half. “The dumping of steel into India has resulted in excess availability which continues to dent market sentiments and remains a serious threat to the domestic steel industry,” he added.
JSW Steel said steel prices in India continued to remain under pressure driven by surging exports from steel surplus countries at ‘predatory prices’ and declining demand.
“Chinese steel exports continue to increase even at prices below the marginal cost as domestic demand falls faster than production cuts, which is resulting in a global supply glut. Several countries have already initiated tariff / non-tariff barriers to arrest dumping of steel in their markets, the unbridled exports at predatory prices will further intensify trade remedial actions across the regions,” it said.
On the outlook JSW Steel said that domestic iron ore prices are correcting on the back of improving supply with restart of mining capacities. In India, overall activity levels are showing an up tick, monetary easing by the Reserve Bank of India is supportive of growth and recent data print of industrial production is also encouraging.
“Public spending on a few infrastructure segments seems to be picking up. However, the momentum needs to be sustained in the coming quarters,” the company said.
