MUMBAI : JSW Steel Limited today reported its results for the Third Quarter (“3Q FY2016”) and the Nine month ended December 31, 2015 (“9M FY2016”).
The current quarter was marked by planned shutdowns of Blast Furnaces towards relining/modification and capacity expansion at all three upstream steel making locations viz. Vijayanagar, Dolvi and Salem units of the Company. As a result, the Company reported Crude Steel production for the quarter of 2.70 million tonnes while Saleable Steel sales volume stood at 2.55 million tonnes. On completion of these low cost and returns accretive projects, the installed capacity of the Company will increase by about 25% from 14.3 million tonnes per annum to 18 million tonnes per annum. Despite lower volumes due to planned shutdowns, the Company strategically reduced share of exports to 12% of total sales (from 29% in the same period last year), and domestic sales volumes grew 8% YoY during the quarter. Increase in Retail sales (which grew 82% YoY) enabled by strategic expansion of distribution footprint and influencer engagement programmes helped achieve this. More importantly, the product mix was enriched with value added products accounting for 36% of total sales during the quarter.
Global commodity prices have been on a downward spiral and seen a sharp correction on the back of weakening demand and supply glut conditions. The seaborne prices of iron ore and coal have dropped by 40% and 31% respectively during CY2015. JSW Steel’s subsidiary, JSW Steel (USA) Inc’s operations of the Plate and Pipe Mill have continued to suffer losses during the last few years. In view of the lower long-term commodity prices forecasts and continuing losses at the US plate and pipe mill operation, the Company has made a total provision of ` 5596 crores for diminution in value of investments, other than temporary, in the value of certain overseas investments, loans and advances and towards certain guarantees for borrowing by the subsidiaries which has been disclosed as exceptional items in the results and includes: ` 3436 crore for the quarter in JSW Steel (USA) Inc, a subsidiary company. ` 1156 crore for the quarter in JSW Panama (Holding) Corporation and its subsidiaries. ` 348 crore for the quarter in Periama Holding LLC and its subsidiaries. ` 656 crore for the quarter in JSW Steel (Netherlands) BV. After providing for these exceptional items towards diminution in value of investments, the net loss after tax stood at `4,142 crores for the quarter. Gross Turnover and Net Sales for the 9 month stood at `29,923 crores and `26,841 crores respectively. The Operating EBITDA for the 9 month was `3,948 crores. The company posted a Net loss of ` 3,871 crores for the 9 month ended December 2015. The net gearing stood at 1.48x as on 31 st December 2015 (as against 1.22x as on 30th Sept 2015) and Net Debt to EBITDA stood at 5.67x (as against 4.55x as on 30th Sept 2015). Update on Forest Development Tax matter The Hon’ble High Court of Karnataka has granted partial relief by a judgement dated December 3, 2015 delivered in response to a petition filed by mine owners and purchasers of iron ore, including the Company, contesting levy of Forest Development Tax (FDT) by the State of Karnataka. Pending certain clarifications on the levy of FDT from the Monitoring Committee, the Company has not written back the FDT expenses recognized till date. Subsidiaries Performance: JSW Steel Coated Products: During the quarter, JSW Steel Coated Products registered production (Galvanised/Galvalume products) volume of 0.33 Million Tons and sales volume of 0.34 million tonnes. The Gross Turnover and Net Sales for the quarter stood at `1,629 crores and `1,506 crores, respectively. It recorded an Operating EBITDA of `38 crores and a Net loss after Tax of `22 crores for the quarter. Chile Iron ore Mines: The Chile operations remain under care and maintenance from end April 2015. The Company reported an EBITDA loss of $0.32 million for the quarter.
US Plate and Pipe Mill: The US based Plate and Pipe Mill facility produced 0.049 million net tonnes of Plates and 0.013 million net tonnes of Pipes, reporting a capacity utilization of 20% and 10%, respectively, during the quarter. Sales volumes for the quarter stood at 0.036 million net tonnes of Plates and 0.012 million net tonnes of Pipes. It reported an EBITDA Loss of $4.9 million for the quarter. Consolidated Financial Performance: The Company recorded Gross Turnover and Net Sales of `9,562 crores and `8,621 crores, respectively, for the quarter, and an operating EBITDA of `892 crores. During the quarter, the Company recorded impairment charges of ` 2121 crores towards fixed assets, goodwill and other assets comprising of ` 905 crores for its US operations of plate and pipe mill, ` 172 crores for its coal mines operations in US and ` 1045 crores for its iron ore mines operation in Chile, leading to a downward revision of the carrying value. The Net loss after Tax for the quarter was `923 crores, after incorporating the financials of subsidiaries, joint ventures and associates. Gross Turnover and Net Sales for the 9 month stood at `34,045 crores and `30,746 crores respectively. The Operating EBITDA was `4,248 crores and the Net loss was `913 crores for the 9 month ended December 15. The net gearing at consolidated level was 1.83x at the end of the quarter (as against 1.72x as on 30th Sept 2015), Net debt to EBITDA at consolidated level is 6.66x (as against 5.32x as on 30th Sept 2015) and the weighted average interest cost of debt was at 7.11% (vis-a-vis 7.15% as on 30th Sept 2015).