JSW Steel reported a 24% fall in fourth-quarter profit to Rs 5730.23M (US$105.8M) as shortages of iron ore forced it to operate below capacity.
The company, however, anticipates improved performance in the current fiscal year (to 31 March 2014) as it expects to benefit from the supreme court's decision to lift a mining ban on a number of iron ore mines in the state of Karnataka. For fiscal 2013-14, the company expects crude steel production to rise 9% to 9.25Mt from 8.52Mt in fiscal 2013. Saleable steel is expected to grow 10% to 9.75Mt from 8.87Mt in fiscal 2013. The company expects its plants to operate at 85% of their capacity in fiscal 2014, compared with 80% in fiscal 2013.
Production at JSW Steel's 10Mt/y capacity plant located at Vijayanagar plant in Karnataka state in the south west of India has had difficulty in obtaining sufficient ore since 2011 after India's top court banned mining in the state due to illegal operations by some mines. JSW Steel, which normally buys its entire iron ore requirement locally, has been forced to pay higher prices for the key raw material at e-auctions sanctioned by India's top court.
In the latest reported fourth quarter, the company was hit by higher interest and depreciation costs as it could not operate its 3Mt/y expansion which was commissioned earlier because of the ore shortage. Moreover, the tax provision was higher as the surcharge was increased from 5% to 10% in the FY14 Union Budget. Depreciation and amortisation costs rose 12% to R5270.43M ($9.61M).