JSW Steel Posts Rs 107 Cr Loss in Q1 on Alloy Price Fall

Mumbai: A sharp fall in steel prices and dumping of cheap steel has hit JSW Steel, which on Wednesday reported a net loss of Rs 107 crore on a consolidated basis for the first quarter of FY16.

The Sajjan Jindal-led firm had clocked a net profit of Rs 657 crore in the corresponding period a year ago.

Total consolidated income of the company also declined 13 per cent to Rs 11,576 crore in April-June quarter of this fiscal year from Rs 13,254.07 crore in the year-ago period.

On a standalone basis, the company reported a net profit of Rs 30.75 crore as compared to Rs 801.37 crore in the same period a year ago.

"The steel prices have fallen unreasonably by 7-8 per cent during the quarter ended June 2015. The continued cheap imports from China, Japan and Korea has hit the company's working," JSW Steel joint MD and group CFO Seshagiri Rao told reporters here.

The Indian steel industry continues to suffer from a surge in imports at a price significantly lower than domestic prices in exporting countries, especially China, Japan and South Korea. Japan is selling HR coil at $500 per tonne in the domestic market, whereas it is exporting the same to India at $350 per tonne, Mr Rao said.

"Several countries have initiated tariff/non-tariff barriers to arrest dumping of steel in their markets. We are expecting that government should act expeditiously to stop further damage from dumping to the domestic industry," he added.

During the April-June quarter, the company's crude steel production grew 10 per cent to 3.4 million tonnes (MT) from 3.1 MT in the year-ago period. Saleable steel production was up 8 per cent at 3.11 MT from 2.88 MT in the year-ago period.

"The company had strategically reduced share of exports to 14 per cent of total sales during April-June and despite intensifying competitive intensity due to influx of imports, domestic sales volume grew 29 per cent year-on-year to 2.66 MT," he said.

The company's implementation of the capacity-expansion project, from 3.3 MT per annum to 5 MTPA, at Dolvi in Maharashtra and other ongoing projects are progressing satisfactorily and are likely to complete as per schedule.

Mr Rao pointed out that although tighter liquidity conditions, leveraged corporate balance sheets and progress of monsoon are key risks, the second half of FY16 for domestic steel industry is expected to be better in view of increasing domestic demand.

The steel major is looking at cost control, more efficiency and increasing the sales in domestic market. The company has drawn up plans to increase domestic sales through retail to go up to 3 million tonnes this year, JSW Steel director commercial and marketing Jayant Acharya said.

The company plans to refinance Rs 2,700 crore this year to bring down the cost, but has no plans to raise Rs 4,000 crore through QIP this year, Mr Rao said.

Shares in JSW Steel, on Wednesday, ended 0.17 per cent higher at Rs 812.50 apiece on the BSE.