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Business News/ Companies / Company-results/  Q1 Results: JSW Steel profit surges four-fold, beats estimates
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Q1 Results: JSW Steel profit surges four-fold, beats estimates

JSW Steel's net profit in the April-June 2017 period was pulled lower amid India's nationwide rollout of goods and services tax

JSW Steel shares closed down 0.36% in the broader Mumbai market on Wednesday. Photo: ReutersPremium
JSW Steel shares closed down 0.36% in the broader Mumbai market on Wednesday. Photo: Reuters

JSW Steel Ltd Wednesday said net profit in the June quarter rose 275% from a year ago to 2,339 crore on higher domestic volumes, beating street expectations.

The increase in domestic sales was primarily to the automotive sector, which grew 57% year-on-year.

Crude steel production at India’s second largest steel-maker for the quarter was 4.11 million tonnes (mt) while revenue from operations rose 23% year-on-year to 18,964 crore. Despite higher costs of key inputs like iron ore, coal, ferro alloys and natural gas, operating EBITDA for the quarter stood at 4822 crore and EBITDA margin was 25.4%.

The company’s net debt increased 1070 crore, primarily due to 865 crore mark-to-market impact on rupee depreciation.

Protectionist measures by the US and Europe to safeguard their domestic steel industries, restricting imports into their jurisdictions, is leading to increased imports into India. “We have started the dialogue," Seshagiri Rao, Joint MD and Group CFO, JSW Steel, told the media on Wednesday after announcing the company’s first quarter results. “The industry will be making representation to the government, asking for a safeguard duty or fixed price mechanism from reference price mechanism as imports from the FTA (free trade agreement) countries has been higher than any other country."

“Steel imports during the quarter increased by 15% year on year. After a gap of three years, India has become a net importer in the first quarter," said Rao. Imports from South Korea and Japan increased by 31 percent year on year and constituted 52 percent of total imports into the country. India has free trade agreements with these countries.

Steel demand in Q1 grew at 9.2% year-on-year. However, with imports growing 15% over the same period, the steel industry is asking for import duties on par with those being implemented in the US and across Europe.

Shares of JSW Steel closed at 316.65, down 0.52% on the BSE on Wednesday.

At the shareholders’ meeting on Tuesday, Sajjan Jindal, Chairman and MD, JSW Steel, said he believed his company JSW Steel would turn around and merge the bankrupt Monnet Ispat with itself within a year. “We will eventually merge Monnet Ispat into JSW Steel and it will be a JSW brand. Our past experience is normally we turn around in one year, so we hope that will happen." Jindal said. Last week, the National Company Law Tribunal (NCLT) approved AION-JSW Steel consortium’s 2,875 crore takeover proposal for the 1.5 million tonne asset in Chhattisgarh run by Monnet Ispat and Energy.

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Published: 25 Jul 2018, 04:32 PM IST
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