JSW Steel was able to procure higher realisations during the quarter ended June'05 as compared to the corresponding previous quarter. However due to the steep rise in the Input costs such as iron-ore and Coal the OPM margin were under pressure. The RM cost as a percentage of sales (Net of stock Adjustment) increased from 43.0 % during the quarter ended June'04 to 49.7% during the quarter ended June'05.

The Figures for the quarter ended June'04 have been recast (to give the effect of the merger of steel business of erstwhile Jindal Iron & Steel Company) to make them comparable with the figures for the quarter ended June'05.

Operational Highlights

The production of pellets, Crude steel & HR coil has increased by 21%, 39% & 45% respectively during the quarter ended June'05 when compared to the corresponding previous quarter. The production of Pellets, Crude steel and HR coils increased from 7.5 lakh tonnes, 3.83 lakh tonnes and 3.55 lakh tonnes respectively during the quarter ended June'04 to 9.08 lakh tonne, 5.32 lakh tonnes and 5.13 lakh tonnes respectively during the quarter ended June'05. However the production of GP/GC reported a marginal 1% decline for the quarter ended June'05 when compared with the corresponding previous quarter. The production of GP/GC declined from 1.62 lakh tonnes during quarter ended June'04 to 1.60 lakh tonnes during quarter ended June'05. The incremental Hot metal capacity commissioned in the 2^nd half of the FY 2004-05 helped JSW steel to achieve higher volume growth in crude steel, pellets and HR coil.

During the quarter ended June'05 the sales of pellets and HR coils rose by 81% and 37% respectively. The sales of Pellets and HR coils increased from 0.62 lakh tonnes and 2.03 lakh tonnes respectively during the quarter ended June'04 to 1.12 lakh tonne and 2.78 lakh tonnes respectively during the quarter ended June'05. However the sale of GP/GC registered a 14% decline during the quarter ended June'05 when compared with the corresponding previous quarter. The sales volumes of GP/GC were lower due to the Mumbai Port strike for around 6 days during end of June 2005, which lead to stock accretions in the value added products.

Quarterly Analysis

For the Quarter ended June'05, JSW Steel sales revenue stood at Rs 1538.81 crore which was 20% higher when compared with the corresponding previous quarter. However, the OPM slipped marginally by 20 basis points to 32.8% in the quarter ended June'05 from 33.0% in the corresponding previous quarter. The resulting operating profit for the quarter ended June'05 stood at Rs. 504.69 crore which was 19% higher as compared to corresponding previous quarter.

The Other Income declined by 10% and stood at Rs. 2.46 crore. The resultant PBIDT for the quarter ended June'05 stood at Rs. 507.15 crore which was 19% higher as compared to the corresponding previous quarter. The Interest cost sharply declined by 28% to Rs. 90.35 crore. The fall in the Interest cost was mainly due to the repayment of Debt to the tune of Rs. 285 crore during the quarter ended June'05.

JSW steel is planning to reduce its debt-gearing ratio to less than one by the end of current financial year. After repayment of the Debt to the tune of Rs. 285 crore the debt-gearing ratio as on 30^th June 2005 was 1.14. During the quarter the company refinanced the Rs. 325 crores of Debt with 6 years Rupee term loan at an Interest rate of 8% p.a. payable monthly.

The resultant PBDT for the quarter ended June'05 stood at Rs. 416.80 crore which was 39% higher as compared to the corresponding previous quarter. The depreciation expenses marginally increased by 3% to Rs. 91.91 crore. The subsequent PBT for the quarter ended June'05 stood at Rs. 324.89 crore which was 54% higher as compared to the corresponding previous quarter.

During the quarter ended June'05, the company had an extraordinary expense (resulted due to miscellaneous expenditure written off) to the tune of Rs 15.14 crore. The resultant PBT after EO for the quarter ended June'05 stood at Rs. 309.75 crore which was 58% higher as compared to the corresponding previous quarter.

The Provision for tax (including deferred tax) for the quarter ended June’05 stood Rs 109.39 crore resulting in PAT of Rs 200.36 crore which was 85% higher as compared to the corresponding previous quarter.

The closing price of JSW Steel on July 22, 2005 was Rs 275.70.