Lost out on Rs 3,000 crore due to mining ban: JSW Steel

Mumbai: If JSW was really involved in the Karnataka mining scam, then why would it have not been allotted a single iron ore mine despite an investment of Rs 50,000 crore in the state?

This was the question, the company’s head Sajjan Jindal asked reporters after announcing its fourth quarter numbers today.

He reaffirmed that the company was in fact a victim in the mining scam rather than a participant. Without the ban on iron ore mining, he said, JSW Steel would have added Rs 3,000 crore more to its operating profit.

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The Supreme Court on Friday ordered a CBI probe against his company for allegedly granting undue favours to JSW Steel and others in lieu of donations to a charitable trust run by his kin. Jindal said the Supreme Court has said it is a suspicion and a CBI probe would be the apt thing to clear that suspicion.

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The court has issued an order for over Rs 10 crore donation by a group company of JSW Steel to Prerana Education Society set up by close relatives of Yeddyurappa. Jindal said the sum was a part of JSW Steel’s corporate social responsibility spending and had nothing to do with irregularities in the mining reported in the state. Jindal said he supported the export ban on iron ore as excessive mining has led to the mess the state is in.

JSW Steel today reported a standalone net profit of Rs 752 crore for theJan-March quarter, down 9.7 percent as compared to Rs 833 crore in the year-ago period. Operating profit margins declined at 17 percent versus 22.5 percent in the same quarter last year. The management admitted there was pressure on profitability as it was buying expensive iron ore at spot prices due to no assured supply. But margins are expected to remain stable for the next year as coking coal and iron ore prices could remain range bound.

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For the next year the company has set a target of 8.5 million tonnes of production. The output target has been cut by 2 million tonnes due to the ongoing problems in Karnataka.

The company said it has put a halt to any further expansion of its plant at Vijaynagar though it is still committed to its project in West Bengal. Regarding its acquisition of Ispat, it said, it is a long-term buy though turning around the company has taken longer than imagined. The company is also looking for more mining assets overseas though it has no plans to set up manufacturing facilities abroad.