Steel major, JSW Steel, today said it has posted a net profit of Rs 514.23-crore in Q3 FY 10 compared to a net loss of Rs127.50 crore in the year-ago period, on the back of strong growth in volumes, reduction in cost and forex gains.
Net sales of the company rose by 65 per cent to Rs4,587.66 crore in the quarter. "The debt levels and the interest costs have come down substantially in Q3 as compared to the corresponding quarter last year and volumes in production and sales posted upward momentum," JSW's joint managing director and Group CFO, Seshagiri Rao, told reporters here.
During the period, the cost of production has also reduced substantially by 34 per cent compared to the same period last year, he said.
He further said that due to the strong recovery in demand and increase in cost of production, steel prices are expected to increase marginally.
"The cost of production has now gone up substantially as compared to Q3 FY 10. Iron ore prices have increased from $55 per ton to $130-133 per ton. Considering these factors along with economic recovery and demand recovery, we can expect an increase in the price soon," he said. However, he said the prices for the year 2010 has already been negotiated.
Steel consumption in India jumped 7.7 per cent in the nine-months to December, boosted by the Government's plan to spend Rs40,000 crore this fiscal year to build infrastructure.
"We are inching towards maximum capacity utilisation. In the US and Europe, production level in steel sector is 60 per cent of the capacity while it is 85 per cent in China. In India, it is above 90 per cent levels," Rao said. The company is also expecting a good prospect in the US during next fiscal, Rao said.
The pipe market is doing well and the capacity utilisation of the pipe plant has gone up from 12 per cent to 20 per cent and in Q4 the company is expecting EBIDTA neutral or slightly positive.
The company commissioned 2 units of beneficiation plant during the third quarter of the current fiscal at its Vijayanagar Works. The company is setting-up a 300 megawatt power plant at Vijayanagar, which would be commissioned by March 2011, he said.
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