Cost cutting helps JSPL narrow losses to Rs 407 cr
Lower conversion and material costs and overhead expenses reduced the third-quarter consolidated net loss of Jindal Steel and Power Ltd (JSPL) by more than half to Rs 407.44 crore. The company recorded higher volumes and better price realisation during the quarter.
JSPL had posted a net loss of Rs 869.73 crore in the October-December quarter of 2015-16. Total income increased to Rs 5,407.87 crore during the quarter from Rs 4,336.05 crore in the same period a year ago.
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“We made an effort to cut our conversion and material costs and also reduced our overheads," Ravi Uppal, managing director and group chief executive officer, JSPL, told Business Standard.
In the last few months, the company divested some of its assets to pare its debt of around Rs 45,000 crore, including Rs 26,000 crore in the steel business. JSPL’s debt has been reduced by Rs 2,000 crore during the period. The debt of the power business had, however, risen due to increased borrowings, Uppal said.
Steel production rose 18 per cent, year on year, to 1.15 million tonnes. Pellet production was 1.69 million tonnes during the quarter against 0.88 million tonnes in the same period of the previous year. External sales of pellets, including exports, were 0.71 million tonnes.
JSPL’s depreciation cost rose to over Rs 1,000 crore after it revalued its assets. “The valuation of our steel, power and mine assets has gone up by Rs 20,000 crore, due to which the depreciation cost has risen in the October-December period," Uppal said.
While the imposition of a minimum import price in February 2016 brought cheer to the domestic steel industry and helped reduce imports, Uppal said, “It wasn’t effective post April because by then international steel prices had started rising."
JSPL’s total employee cost, which comprises 4.5-5 per cent of the turnover, rose to Rs 236.79 crore during the quarter from Rs 156.37 crore in the same period a year ago.
The company posted a standalone net loss of Rs 186.53 crore during the the quarter, down from Rs 519.02 crore in the same period a year ago. Total income increased to Rs 3,518.95 crore, year on year, from Rs 2,918.55 crore.
JSPL had posted a net loss of Rs 869.73 crore in the October-December quarter of 2015-16 Total income increased to Rs 5,407.87 crore during the quarter from Rs 4,336.05 crore in the same period a year ago In the last few months, it divested some of its assets to pare its debt of around Rs 45,000 crore, including Rs 26,000 crore in the steel business