Jindal Vijayanagar back in black

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in black May 07, 2003 14:01 IST

Jindal Vijayanagar surged 5.38% to Rs 4.90 following impressive fourth quarter performance recorded by the company.

By 10:07 IST, the scrip of Jindal Vijayanagar registered volumes of over 1.5 lakh shares on the BSE. In last six sessions, between 25 April and 6 May 2003, the scrip rose 16.25% to Rs 4.65

from Rs 4.

The rise in the scrip is purely on the impressive fourth quarter performance recorded by the company. This is the first time in last eight quarter that the company recorded profit. For the

fourth quarter ended 31 March 2003, the company posted a net profit of Rs 89.15 crore compared to a net loss of Rs 23.42 crore in the corresponding period of the last year. Net sales also of

increased by 70.6% to Rs 817.55 crore (Rs 8.17 billion) from Rs 479.32 crore (Rs 4.79 billion) in MQ 2002. For the quarter the company has made a cash profit of Rs 146.41 crore (Rs 1.46

billion).

Meanwhile for the full year ended 31 March 2003, the company drastically reduced its losses to Rs 110.67 crore (Rs 1.1 billion) as against Rs 352.47 crore (Rs 3.52 billion) for the previous

year. While the net sales rose by 44.3% to Rs 2,504.76 crore (Rs 25.04 billion).

For the whole year, JVSL's production was recorded a 12% rise at 1.42 million tonnes, while sales rose by 10% at 1.41 million tonnes over year-ago levels. Of which the fourth-quarter

production was 413,000 tonnes and sales was 426,000 tonnes.

The impressive results have been due to the turnaround witnessed in the Indian steel sector following sustained demand for steel (in both domestic and international market) coupled with a

sustained hike in steel prices over the last year.

However ever since April 2003, the steel prices have started to melt down. There has been Rs 1,000 per tonne reduction, each in April and May 2003. China and US steel consumption is critical

to the sustainability of global steel prices.

Oflate, there are reports that China may cancel some steel imports, on account of build up of inventories on the one hand, and the slow down in the pace of growth of the Chinese economy on

account of the outbreak of SARS.

Nevertheless, the company is hopeful that the global prices may not weaken further beyond Rs 500 to 700 per tonne from the current levels. On its part, the company has put in place a revised

financial package, which will ensure relatively low interest costs in line with the current market trends, and the repayments are in line with the projected cash flow from operations. On

the other, the company is striving to minimise wastage and to improve cost effectiveness. With these initiatives, and as the downside risk of steel prices is relatively limited, the company

is hopeful of better days ahead.

As on 31 March 2003, promoters held 60.19% stake in the company, while public and institutions held 22.83% and 4.58% respectively.

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