JSW Steel Q4 net grows 30% on higher volumes, strong demand

MUMBAI: JSW Steel, the Sajjan Jindal-controlled steelmaker that is the country's largest by capacity, said its fourth quarter consolidated net profit grew 30%, as it was able to sell more steel to local customers due to growing demand from consumer goods and infrastructure sectors.

Mumbai-based JSW Steel, which acquired rival Ispat Industries in January, posted a net profit of 794 crore in the March quarter, as its steel volumes surged due to additional production from a new mill. The company, which has interests in power, also saw larger sales of electricity units. The revenue grew 32% in the same period.

Steel, which is used by carmakers and makers of bridges alike, has seen demand grow faster in India than in any other economy, expanding by around 9-10% as higher incomes prompted people to buy cars and high-value consumer products. The government, on its part, has also launched a series of bridge-building and port-making exercises that increased consumption of steel.

But the robust demand for steel has been offset by a sharp surge in iron ore and coking coal, which are the two main inputs for making steel and typically account for almost half of the production cost. Demand from China, the world's largest steel market, and tight supplies due to natural disasters in mineral-rich countries, have led iron ore prices to almost double, while coking coal prices grew 54% in the past six months.

"We have been able to counter that with higher volumes," V-C Sajjan Jindal told reporters at a conference.

JSW achieved the highest-ever quarterly production of crude steel at 1.647 million tones and additional production from the first phase of its new mill at existing plant site at Vijaynagar. It plans to further expand the capacity at its plant at Vijaynagar, from 10 million tonnes to 12 million tonnes for 2,695 crore. The company will spend 945 crore of its own cash and raise debt for the remaining.

JSW is targeting to complete its expansion to 10 million tonnes by June. It also has plans to spend 5,000 crore on various expansion projects in the current financial year, of which half will be financed by debt.