JSW Steel, India's largest steelmaker by capacity, has signed a coking coal contract for the year at $100 per tonne, said Sajjan Jindal, vice chairman and managing director. He said the deal was signed with an Australian company, but refused to divulge its name.
Last year, JSW Steel contracted coking coal at $305 per tonne. Jindal said that the company is currently buying iron ore from the spot market at $17-18 per tonne.
On Thursday, JSW Steel reported that its net profit on a standalone basis dropped to Rs 49 crore in the quarter ended March 31, 2009, from Rs 370 crore in the same period last year. The company said it had sourced raw material at a very high price in the second and the third quarters. However, steel demand was low and inventories piled up in the quarters, which it cleared in the fourth quarter.
Jindal said, "In the March quarter, we sold all the excess inventories of the third quarter. The raw material was bought at high costs and steel prices were depressed." On a yearly basis, JSW Steel posted standalone net profit of Rs 458.5 crore in FY09 against Rs 1,728 crore in FY08.
However, on a consolidated basis, the company reported a net loss of Rs 40 crore for the March quarter against a profit of Rs 357 crore in the same period last fiscal.
Seshagiri Rao, director (finance), said, "This loss on consolidated basis was basically because of the huge write-downs of inventories at our US operations. We have written down inventories worth $54 million in the fourth quarter." Jindal said the utilisation levels at the US plant currently are just 10-15% as the steel market in that country isn't doing well.
On a standalone basis, net sales for the fiscal stood at Rs 14,000 crore, a growth of 23% over the previous fiscal. JSW Steel said it could not maintain margins despite huge volume growth and higher realisations as the cost of production has gone up by 49%. Jindal said, "The Ebidta margins dropped by 8.5% and stood at 21.8% for the fiscal ended March 31."
Source: DNAIndia
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