JSW Steel net surges 26.18%; more price correction unlikely

Written by fe Bureau | Mumbai | Updated: Jul 28 2010, 05:36am hrs
JSW Steel, India's third largest steel manufacturer, on Tuesday reported a 26.18% growth in its consolidated net profit to Rs 295.37 crore for the first quarter ended June 30, 2010, against Rs 234.08 crore in the corresponding quarter last year. The company's consolidated net sales during the quarter stood at Rs 4818 crore, up 20.74%, as compared to Rs 3,990.19 crore in Q1 FY10. Its Ebidta during the quarter stood at Rs 1,081.60 crore with US operations reporting a positive Ebidta of $ 7.62 million.

During the quarter, the company reported a 14% year-on-year (y-o-y) growth in volume in crude steel production and 33% y-o-y in rolled products. JSW Steel vice-chairman and managing director Sajjan Jindal said, The first quarter of FY11 was challenging for the entire steel industry. The monetary squeeze in China and European debt crises impacted the steel consumption and prices. Jindal, however, do not expect the steel prices to correct further.

JSW Steels shares on Tuesday slipped 0.81% to close at Rs 1,160.65 on the BSE.

JSW is currently expanding its capacity at Vijaynagar, Karnataka by 3.2 million tonne at an investment of Rs 7,000 crore. This will take the company's total capacity to 11 million tonne by March 2011. JSW has applied for captive iron ore mines in Karnataka and is waiting for the grant of the mining lease in the iron ore-rich Bellary-Hospet region of north Karnataka. The company required around 25 million tonne iron ore to feed its plant once the expansion was completed.

When asked whether there is discrimination by the government between domestic and multinational companies in granting iron ore licences, Jindal replied, I don't think there is discrimination but the white skin is given more importance, and that continues even today, as they bring in FDI. However, the Karnataka government is doing its best to ensure that right justice is made.

Jindal also revealed that JSW would start construction of its Rs 35,000 crore 10 million tonne Salboni plant in West Bengal before the end of the FY 2011. He said three years would be required to complete the construction work of the plant from the day of ground breaking. When asked about the financial closure of the project, Jindal said, We have not yet concluded financial closure for the Salboni project, however, that wont be an issue.