JSW Steel on Friday reported a consolidated loss of Rs 923 crore in the three months to December against profit of Rs 328.94 crore a year ago...
JSW Steel on Friday reported a consolidated loss of Rs 923 crore in the three months to December against profit of Rs 328.94 crore a year ago, partly because sales were weak and also because it took a one-time impairment charge of Rs 2,122 crore. The company took a charge on four strategic investments that it made overseas.
Net sales fell 33% in Q3FY16 to Rs 8,621 crore due to lower realisations and also a drop of 16% in sales volumes on account of planned shutdown at three of the total seven blast furnaces. The contribution of export revenues was also lower at 12% compared to 29% last year. As per Bloomberg estimates, JSW Steel was expected to report a net loss of Rs 60.14 crore in the quarter on sales of Rs 8,329 crore.
Seshagiri Rao, joint managing director and group chief financial officer, JSW Steel, said, “In the third quarter we had to review the overseas investments made between 2007-2010 since prices of crude oil, coal and iron ore have significantly fallen from the time of investment and as per the appointed external agency, an impairment charge had to be taken in the December quarter. The company has taken an impairment hit of Rs 2,122 crore in the December quarter.”
A subdued business environment led to JSW Steel reporting the lowest EBITDA per tonne since 2008 at Rs 3,443 per tonne in Q3FY16 which is half of Rs 6,995 per tonne reported a year ago.
“The reported EBITDA per tonne was lower than what it should have been mainly because of a planned shutdown of 3 blast furnaces which had some fixed costs that had to be taken in the profit-and-loss statement, else the EBITDA per tonne (without fixed costs despite shutdown) would have been about Rs 4,700 per tonne” Rao said.