JSW Steel, India’s third-largest steelmaker, reported a 19% fall in quarterly profit, missing market expectations, as a shortage of iron ore supplies pushed up raw material costs and a weak rupee resulted in forex losses.
Net profit after tax on a stand alone basis fell to R136.7 crore, from R168.2 crore a year earlier. The company did not immediately disclose consolidated results, that include numbers from its subsidiary JSW Ispat.
The steelmaker said exceptional charges also ate into its profit. A 4% decline in the rupee versus the dollar in the quarter resulted in a forex loss of R267 crore. IT also made a R60 crore writedown on its investment in US Plate & Pipe mill in the quarter.
Crude steel production rose 8% to 8 MT, while total saleable steel rose 14% to 2.17 MT. Shortages of iron ore and poor quality of ore hurt productivity by 20% in the quarter and resulted in lower capacity utilisation. Net sales for the quarter rose 5% to R8,275 crore.
Production at JSW Steel’s 10-MT Vijayanagar plant in Karnataka has been affected since 2011 after India’s top court banned mining in the state due to illegalities in some mines. JSW Steel, which buys its entire iron ore requirement locally, has been forced to pay higher prices for the key raw material at e-auctions sanctioned by India’s top court.
Share in JSW Steel closed marginally higher at R869.90 in a flat Mumbai market on Monday on the BSE.