Economic activities are gradually picking up across the board in India which reflects improved business sentiment as lockdowns ease, said JSW Steel in its earning release on Friday. The company expressed concerns that localized lockdowns driven by the resurgence of COVID-19 infections remain a key risk. The rural economy is growing at a faster rate as the pandemic is less severe in these areas and government stimulus is also directed towards rural growth. The forecast of a good monsoon also bodes well for the rural economy.
With lower crude oil prices, favourable trade balance and normal monsoon India is well-placed to reap the benefits of global supply chain realignments induced by the pandemic, according to the release. However, major challenges include workforce remobilization and liquidity crunch.
Domestic demand remained subdued during the June quarter. Challenging environment pressured JSW Steel’s bottom line. The company posted a loss of Rs1.46bn ($19.51mn) against a net profit of Rs1.43bn posted in the prior year quarter. Lower costs of iron ore helped partially offset the impact on operating margins. Revenues from operations dropped to Rs10.293bn as lower steel prices and unfavourable product mix impacted JSW Steel’s average realization.
The company’s crude steel production has dipped by 30pc in the June quarter to 2.96mn mt and by 3pc from the prior quarter.
JSW operated at 66pc average utilization rate versus a domestic industry average of 46pc in Q1, according to the company’s earnings report.