JSW Steel reported a 29 per cent increase in net profit at ₹836 crore in the September quarter against ₹647 crore logged in the same period, despite pressure on realisation and high cost.
Sales were up 17 per cent at ₹16,638 crore (₹14,180 crore).
Steel sales were up two per cent at 3.92 million tonnes (mt), while crude production was flat at 3.94 mt. Steel production at the company's unit in Tamil Nadu was impacted by water scarcity and shortage of iron ore supply took a toll on output at its Vijayanagar plant in Karnataka.
Seshagiri Rao, Joint Managing Director, said operational challenges apart, import of steel from China doubled to 8.22 lakh tonnes in the September quarter as it dumped sub-standard material below the market price.
The minimum import price of $490 a tonne fixed by the government to protect domestic steel producers has become ineffective as globally the price crossed $560 a tonne, he said.
With major portion of domestic demand being met by imports, JSW Steel exported 1 million tonnes during the quarter under review.
Claiming that China had managed to dump steel into India despite Indian prices (excluding taxes and transportation cost) being 10 per cent cheaper than global prices, said Rao.
On the company's bidding strategy for stressed asset, he said it will take a calculated step as it has ample room for brownfield expansion and will not stretch itself financially just because some assets are available.
"The overall cost for the company's 18 million tonne capacity works out to ₹3,000 crore a tonne and we need a compulsive reason to bid anything above this for a stressed asset," he said.
The company's net debt reduced to ₹42,764 crore, while the cost of borrowing was down by 5 basis points.
Globally, he said trading on equity shares of companies under the NCLT process are suspended to curb speculation. "When the secured creditor is made to take hair cut of 50-60 per cent, how can unsecured investors in equity can be allowed to speculate and make money," he said.
With firm coal prices, JSW Steel plans to restart coking coal mining in the US by end of this fiscal.
The company is waiting for the Court-appointed Monitoring Committee in Karnataka to enhance the overall iron ore production cap beyond 30 mt as it has approved mining plan for 33 mt at its Category 'C' mines.
Source: The Hindu Business Line