Mumbai: Sajjan Jindal-promoted JSW Steel, India's second-largest private sector steel producer, saw profits halve in the March 2019 quarter, in line with market expectations. Consolidated net profit fell to ₹1,495 crore, down 48%, from ₹2,879 crore it reported in the year-ago period as costs of key inputs such as power, fuel and consumables rose due to rupee depreciation and higher electrode and refractory costs. Consolidated revenue for the same period stayed flat at ₹19,264 crore.
Crude steel production fell 3% year-on-year to 4.17 million tonnes (mt) during January-March against 4.31 mt last year. Standalone steel sales rose 2% to 4.29 mt from 4.22 mt. Operating EBITDA for the quarter declined 14% year-on-year to ₹4,341 crore and the EBITDA margin stood at 22.03%. EBITDA/tonne was ₹10,302 during the quarter. While sales to the auto sector flattened out for the quarter, growth in retail sales and sales of value-added products picked up pace.
For the full year, the company reported a net profit of ₹7,524 crore, up 23% year-on-year, from ₹6,113 in FY18. Revenue from operations rose 16% to ₹84,757 crore during the period. Net debt increased to ₹45,969 crore, up from ₹38,000 crore at the end of FY18.
JSW Steel, which is currently implementing a massive capital expenditure programme, has decided to raise its capex programme by ₹5,700 crore to ₹48,715 crore. Of the increase, ₹1,000 crore will go into downstream investment, ₹2,200 crore into cost-saving projects and ₹2,000 crore into mining and sustenance capex. Of this total, the company will spend ₹34,300 crore over FY20 and FY21.
The planned blast furnace (BF3) shutdown that would have expanded capacity by 1.7 mt had now been postponed till the capital expenditure programme at Dolvi steel mill was completed, MVS Seshagiri Rao, joint MD and group CFO, JSW Steel, said.
For FY20, the company gave a crude steel production guidance of 16.95 mt and of saleable steel sales of 16 mt, an increase of 1.5% on the actual numbers for FY19. It would mean 95% capacity utilisation for JSW Steel. While the World Steel Association's guidance for 2019 was 1.3% growth in global steel demand, Rao said demand in India was likely to grow by 6.5-7%.
At the board meeting, the company's management passed a resolution to raise up to ₹14,000 crore through either debt or equity instruments through a qualified institutional placement process.
