Steel pipe maker Jindal Saw today reported a 35 percent fall in its standalone net profit at Rs 47.32 crore for the quarter ended September.
The firm, part of the OP Jindal Group, had clocked a net profit of Rs 72.65 crore in the year-ago period, it said in a BSE filing.
Total standalone income of the company rose marginally to Rs 1,411.17 crore in July-September this fiscal, from Rs 1,402.61 crore in the same quarter in 2015-16.
The company's total expenses declined to Rs 1,253.74 crore, from Rs 1,290.65 crore during the period under review.
During the September quarter, Jindal Saw produced pipes and pig iron of around 2.56 lakh tonnes (LT) and pellets of about 3.15 LT.
Its current orderbook for pipes and pellets is around USD 700 million while the position in terms of volume is over 1.08 million tonnes (mt).
As of September 2016, its net institutional debt (at a standalone level) was about Rs 4,183 crore (around USD 625 million) including ECB/long-term loans and fund-based working capital.
This includes net working capital borrowings (short term) of Rs 1,982.2 crore (around USD 296 million) and long term loans (ECB/ rupee loans/ rupee NCD) of Rs 2,200.8 crore (about USD 329 million).
"Working capital borrowing remains high on account of higher orderbook. The company is working towards debt re-profiling to have the long dated debt," Jindal Saw said.
It has deferred its decision to set up a steel plant at Bhilwara (Rajasthan) for the time being.
On outlook, the firm said increase in commodity prices including cocking coal is expected to influence the finished goods sale prices.
Export of pipes from India to countries like the US, Europe and Mexico has been impacted negatively due to imposition of anti-dumping duties by these countries on Indian pipes. On the other hand, India has seen dumping of seamless pipes by countries such as China that has impacted domestic demand.
To provide a level-playing field, India has imposed anti-dumping duties on import of seamless pipes from China, which has supported the Indian seamless pipe industry for some time, Jindal Saw added.
The revenue portfolio is well diversified where about one-third of revenue is generated from oil and gas. Slowdown in exploration and drilling, continued weakness in oil prices coupled with geo-political and war-like situation in MENA region may still have a negative impact on the new demand for steel pipes, it said.
However, it is optimistic that opening of new markets like Iran will provide additional business opportunities to Indian pipe companies.
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