The Hindu Business Line : Jindal Stainless net down 65 pc

Jindal Stainless Ltd has reported a 65 per cent fall in its net profit for the fourth quarter ended March 2006 on account of rising cost of raw materials, electricity, oil and higher interest outgo.

Net profit for the quarter stood at Rs 32.69 crore against Rs 92.89 crore in the same quarter last fiscal. Total sales amounted to Rs 827.04 crore.

It reported a net profit of Rs 163.61 crore for the fiscal 2005-06 against Rs 245.85 crore in 2004-05. Total sales stood at Rs 3,200.70 crore, which is marginally higher compared total sales of Rs 3,195.05 crore in 2004-05.

According to Mr Arvind Parakh, Finance Director, "In absence of pricing power and substantially higher raw material cost the EBIDTA margins and the net profits were down. Prices of our major raw materials like nickel, ferro chrome, electricity (oil) turned higher which had to be absorbed and could not be passed on to the customers."

Further there were production losses on account of power outages, commissioning of ongoing expansion plan and preventive shut downs. Higher utilisation of working capital and rupee depreciation during the year lead to higher interest cost, Mr Parakh said.

Orissa project

On the commissioning of the company's Orissa project, Mr Parakh said that the commissioning of ferro chrome furnaces was delayed and was finally commissioned in the last week of March.

"We are in the process of stabilizing the production from the two furnaces and hope to achieve the same by end first quarter or early second quarter. The plans of the Orissa project are going as per revised scheduled and are expected to contribute from the next financial year i.e. 2007-08," h said.

Meanwhile, the High Court of Punjab & Haryana has directed the company to convene a meeting of shareholders, secured creditors and unsecured creditors on May 6 to consider the scheme of arrangement among Jindal Stainless, Austenitic Creations Private Ltd and Jindal Architecture for hiving off the Life Style Product Division and Architecture Division.

The demerger of the divisions would enable creation of independent entities with focus on their respective core businesses, he said.