In line with reports of a revival in demand for steel, country's largest private sector steel maker returned to making profits in the last three months of fiscal 2008-09, after slipping into red in the previous quarter.
The company's net profit for Jan-March period in 2009 was still down 87 per cent at Rs 49.20 crore over Rs 370.18 crore in 2008, but is significantly better than its performance in October-December period when it had registered a loss of Rs 127.50 crore. JSW's turnover during the quarter also declined by 9.6 per cent from Rs 3,894.03 crore to Rs 3,519.83 crore.
For the full fiscal 2008-09, net profit for the company which does not have any captive mines in the country, declined by 73.5 per cent from Rs 1,728.19 crore to Rs 458.50 crore. Turnover however went up 20.2 per cent from Rs 12,628.91 crore to Rs 15,179.29 crore due to higher sales. During the year JSW lost Rs 790 crore due to foreign exchange fluctuations.
"Inspite of the growth in volumes and higher realisation, we could not maintain margins as the cost of production has gone up by 49 per cent," said Sajjan Jindal, vice chairman, JSW steel. "Signs of a revival in demand are however strong and the reset of long term coking coal and iron ore contract prices at significantly lower levels in the current fiscal will be an added advantage for us."
Banking on a complete revival in the current fiscal, the company is targeting a 78 per cent growth in production to 6.1 million tonnes. It has already restored production to normal levels by restarting the two furnaces that were shut down last year.