JSW Steel, India's largest steelmaker by capacity, reported a second-quarter profit on Friday, helped by robust domestic demand and lower input costs.
The company reported a consolidated net profit of Rs 2,760 crore in the quarter ended September from Rs 848-crore loss a year earlier.
Total revenue from operations rose 6.7% to Rs 44,584 crore. Total expenses slipped nearly 6% due to an almost 10% contraction in key raw material costs.
The government's focus on infrastructure and positive consumer sentiment are driving investments, the company said in a statement.
Total steel sales in the second quarter increased 10% to 6.34 million tonnes, with domestic sales rising 8%. Exports, at 690,000 tons, constituted 11% of sales from the India operations, the company said.
The demand for steel remained strong in the quarter as construction and infrastructure-related activities continued amid weak monsoon, analysts said. Further, lower costs of coking coal, a key raw material for steel companies, helped the profit growth, they added.
Last month, India imposed an anti-dumping duty on some Chinese steel for five years after finished steel imports from China surged in April-July period.
"Downside risks to global growth remain, but the odds of a hard landing have receded," JSW Steel said, adding that moderating inflation and improvement in global demand will aid recovery.
The company, however, flagged concerns over the conflict in the Middle East.
Shares fell as much as 2.2% during the session but pared losses after the result. They ended down 1.4%.
The company had taken certain maintenance shutdowns at Indian operations during the quarter, and the average capacity utilization was 89 per cent. The capacity utilization was lower at the Ohio, US operations due to adverse market conditions, JSW Steel said. The company was able to reduce inventories by 0.3 million tonnes during the quarter. The company had a ''fair value gain of Rs 780 crores on its investments held in CSSL upon fair valuation pursuant to merger of CSSL and JISPL''. It also had a gain of Rs 198 crore upon sale of property, plant and equipment and mineral rights held at West Virginia.
The company also noted an exceptional provision amounting to Rs 389 crores pursuant to dismissal of the company's writ petition by High Court of Bombay, Goa Bench in the Goa Green Cess matter. Debt increased to Rs 69,195 crore during the quarter, primarily due to additions of borrowings arising out of merger of JSW Ispat Special Products Limited (JISPL).
With inputs from agencies