The flagship business of JSW Group and India's largest steel maker, JSW Steel has reported a staggering 86% YoY decline in profits for the quarter ended in June 2022.

The figure for the relevant quarter stood at Rs 838 crores as opposed to Rs 5,904 crores earned by the company in the corresponding quarter last year. The decline in profit is odd since the company reported a 30.9% surge in revenues as the figure for the quarter came in at Rs 37,500 crores. 

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Saleable steel sales declined 25% to 4.49 million tonnes due to the export duty levied and the reduced demand. Moreover, due to volatile market conditions, the company had preponed several shutdowns, which lowered the average production. 

The company's EBITDA margin declined to 11.3%. In its report, the company attributed the sharp decline in profits to a surge in expenses while citing the inflationary impact of the Russia-Ukraine war on global macroeconomic conditions. 

"The domestic steel industry was impacted by falling global prices and the imposition of a 15% duty on certain steel exports in May 2022 further exacerbated the situation with a steep fall in exports, of 26% QoQ. The export duty on steel products is expected to be a temporary measure to contain inflation and may be removed once inflation cools down. Inherent demand from auto and construction and infrastructure segments remain strong that should support overall steel consumption during FY23," the company said in its statement. 

Looking ahead, the company has planned to increase its capacity to 37 MTPA by 2025. However, the company has reduced its CAPEX from Rs 20,000 crores to Rs 15,000 crores, citing challenging market conditions. 

The scrip closed at Rs 582.45 per share, down 0.87%, on Friday. 

Article by Aman Agarwal. 

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