Input cost, freeze on prices to hit JSW steel

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New Delhi, Aug 8 : JSW Steel, India’s third largest steel producer,will see significant pressures on its bottomlines due to increase in input costs and freeze on steel prices since May 7. “Profits have dropped from 35% last year to 22% this year and we have taken a huge hit on profits,” said JSW Steel vice-chairman and managing director Sajjan Jindal at the sidelines of the 2 nd steel summit here.

JSW Steel’s profits for the first quarter declined to Rs 219.35 crore against Rs 468.45 crore in the year-ago period on a net sales of Rs 3,671.49 crore. Jindal said margins were expected to fall by another 8-10 %.Jindal, however, said his company was willing to support the government's effort to rein inflationary pressures.

“The steel industry is not fly-by-night industry and our investment is for long term.” Jindal added that its plan to invest Rs 1, 00,000 crore to reach 32 million tons of steel production capacity by 2020 was also under pressure as its operating margins have taken a hit.Steel secretary PK Rastogi echoed similar thoughts as he said higher steel inputs cost have also forced the steel manufacturers to suspend their capacities expansion programmes.

Jindal in his inaugural speech said JSW was concerned and it would try its best to adhere to its capacity expansion plans and also those plans for putting up new projects in Jharkhand, Orissa and Chhattisgarh. The steel major has proposed two greenfield projects in West Bengal and Jharkhand besides expansion of its present capacity from five million tonnes to eight million tons within some months.