Domestic steel major JSW Steel saw its net profit for the quarter ended September plunge 71.5% to Rs 127.1 crore as an acute crunch of iron ore, a key raw material in steel making, restricted its production and increased operational costs during the quarter.
JSW's 10 million tonne steel plant at Vijaynagar is in Karnataka where mining has been banned after a Supreme Court verdict in August. The plant is now operating at only 50-60% of its rated capacity.
"Two small furnaces remain closed but the larger furnaces are running," said Seshagiri Rao, group CFO and joint MD, JSW.
Last month, the company had said it may shut the plant, if availability of iron ore does not improve. Despite the low production the company's net sales during the period still grew by 33% to Rs 7,625 crore.
"The profit would also have been much higher had the production not cut due to severe iron ore shortage and also the forex translation losses of Rs 513 crore due to adverse movement in rupee-dollar parity," the firm said in a statement.
"Due to all these problems, not only did our profits drop but we have been forced to revise our guidance," he said.
Target for production for this fiscal has been lowered by 14% to 7.5 million tonne and sales target is down by 13% to 7.8 mt.