NEW DELHI, June 2: Jindal Strips saw its net profit fall down by 40 per cent last year to Rs 54.9 crore from Rs 92.42 crore, making it yet another steel producer to bite the dust in a year of recession.

The net sales of the largest producer of stainless steel in the country, however, only declined by 10 per cent to Rs 1023 crore from Rs 1,139 crore during 1995-96.

The company's gross profit dropped by a marginal 2.4 per cent from Rs 970.01 crore to Rs 858.64 crore.

The drain on Jindal Strips' net profit really came from a heavier outgo on depreciation and interest charges and the minimum alternate tax (MAT).

Jindal Strips paid Rs 60.90 crore as interest and bank charges last year, which was almost two times its interest outgo of Rs 36.57 crore in 1995-96. It set aside Rs 60.12 crore as depreciation charges, compared to Rs 50.03 crore the year before. The imposition of MAT increased Jindal Strip's tax burden to Rs 5.16 crore from Rs 0.20 crore in 1995-96.

A company release blames the ``the high cost of finance on the long-term and short-term loans raised by the company'' for the higher interest outgo and bank charges. It says that Jindal Strips was now trying to ``optimise debt cost by resorting to foreign currency loan'' and by issuing commercial paper. Depreciation was higher, the release says, ``because of capitalisation in the current year.'' During 1996-97 Jindal Strips completed a Rs 463 crore expansion project.

It raised the steel-melting capacity of its Hisar unit to 2.5 lakh tonne from one lakh tonne per annum. The company targets an output of two lakh tonne from the Hisar unit during the current year.

It also invested in electricity generating capacities at its Hisar and Raigarh units to make these facilities self-sufficient in their power requirements.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.