New Delhi: Jindal Steel & Power posted a modest rise in its consolidated fourth quarter profit on higher steel sales but expects capacity addition to boost its performance in FY12.
Jindal Steel’s January-March consolidated profit rose 4% to Rs1,000 crore, while sales went up 21% to Rs3,850 crore on the year.
“The major chunk has come from steel where production was high and sales was also high,” Sushil Maroo, director and group CFO, told reporters on a conference call on Thursday.
“Next year (FY12) should be good because lot of volume expansion is taking place,” Maroo said.
A 1.5 million tonnes steel plant in Orissa would come onstream in third quarter, while the plant acquired in Oman would work to full capacity and 920 MW power capacity would be added in FY12.
The steel business, that makes up about 60% of total sales, contributed 30% to profit in January-March quarter, with balance being accounted for by power, Maroo said.
Steel prices would remain stable in FY12 and the company hopes to offset rise in coking coal prices with increased use of sponge iron produced in-house to guard margins, Maroo said.
The company plans to spend about Rs8000-9000 crore on capacity addition in FY12.
Increased supply could further weaken tariff from merchant power that makes up about 70% of Jindal steel’s total power revenue, Maroo said. He sees tariff at about Rs4 a unit in FY12 compared to between Rs4-4.5 in the fourth quarter.
Jindal Power, a unit of Jindal Steel, that intends to sell shares to raise Rs7200 crore, is yet to decide on a time for the IPO, Maroo said.
The power firm is close to exhausting its regulatory window that expires 27 May to launch its IPO, after which it will have to refile papers with the regulator.
Ahead of the earnings, shares in Jindal Steel & Power, valued at about Rs63,200 crore, ended up 2.73% at Rs695.20 in a Mumbai market that rose 0.6%.