>JSW STEEL: Resolution of iron ore crisis on the horizon

Resolution of iron ore crisis on the horizon: JSW Steel has indicated that a sizeable number of mines had their reclamation and rehabilitation (R&R) plans approved and these mines should start production in the next one-two months. Though we believe it may take three-four months to start production, JSW Steel has built in sufficient amount of inventory to take care of its needs in the interim period. 


Operational performance remains strong: JSW Steel achieved 27% YoY and 4% QoQ jump in steel production due to higher utilisation. The company posted a 4% QoQ surge in realisation, which helped it to achieve a 17% QoQ jump in EBITDA/tn. Overall, the company was able to achieve 33% YoY and 1% QoQ (4QFY12 had an exceptional gain of US$36mn made by the US subsidiary) jump in consolidated EBITDA. 


Performance update of subsidiary and associate companies: US operations reported EBITDA of US$6.4mn in 1QFY13 compared to US$3.6mn in 1QFY12. The Chilean subsidiary reported EBITDA of US$8.5mn compared to US$12.7mn in 1QFY12 and US$0.9mn in 4QFY12. JSW Ispat reported EBITDA of Rs4,490mn compared to Rs2,907mn in 4QFY12. In calculating the profit of associate companies, JSW Steel has not considered deferred tax credit and therefore it reported a loss of Rs1,496mn despite JSW Ispat reporting a profit of Rs4,782mn during the quarter.


To read report in detail: JSW STEEL