JSW Steel ups production at Vijaynagar plant

JSW Steel ups production at Vijaynagar plant

Mumbai: JSW Steel Ltd has raised production at its Vijaynagar plant in southern Karnataka state to 50-60% of capacity from 30% last month, joint managing director Seshagiri Rao told reporters on Friday.

“Two small furnaces remain closed but the larger furnaces are running," at Vijaynagar, Rao said.

It had said in September that it may have to shut its key plant in southern India if iron ore supplies did not improve, missing its output forecast for FY12.

“We perceive this as a temporary situation...once e-auction procedures and new arrivals improve and once capacity starts getting better in terms of utilisation, we would be able to get back," Director Jayant Acharya said.

The Vijaynagar plant accounts for 10 million tonnes of JSW Steel’s total capacity of 14.3 million tonnes. The firm’s production was lower at least by 450,000 tonnes due to shortage of iron ore during the quarter.

The Vijayanagar plant has secured 1.924 million tonnes and the Salem plant secured 0.156 million tonnes of iron-ore in the e-auctions conducted so far. But the iron-ore received at site is only around 18% of total material procured by Vijayanagar Works in e-auctions, the company said.

The firm expects steel prices to remain flat during December quarter, after it raised them by 3-4% in October and saw flat prices during September quarter, Acharya told reporters.

“Steel demand is slightly better now compared to August-September because of the festive season but lower than last Diwali."

Lower FY12 Guidance

On Friday, the company cut its production and sales forecast by about 14% to 7.5 million tonnes and 13% to 7.8 million tonnes respectively for the current fiscal year.

It also announced a 71% drop in September quarter net profit, hurt by lower production and steep foreign exchange losses.

It had forex translation losses worth more than 500 crore due to adverse movement in rupee-dollar parity.

The partially convertible rupee has lost 8.8% against the dollar during the September-quarter, its largest quarterly fall since the same period in 2008.

Shares in the firm, valued by the market at $2.6 billion, lost nearly half of its value in 2011 so far, while the shares were trading at their July 2009 level on their Thursday close.

On Friday, shares closed 0.37% down to 580.45 in a Mumbai market that was down 0.9%.