Steelmaker cites rising input costs and increased cost of production for this proposed move; the company will also pass on the hike to consumers
JSW Steel Limited, India's third-largest steel producer, will increase its product prices in the next month in the wake of rising input costs, a senior official of JSW Steel told Moneylife.
"We raised our product prices in the first week of January, while our spot market prices were also increased marginally. We will go for another price hike in February," said Jayant Acharya, director, commercial and marketing, JSW Steel.
However, Mr Acharya refused to disclose the quantum of the hike.
"We would be in a position to pass on the hike to our consumers," added Mr Acharya.
The company's consolidated profit for the third quarter ended December plunged by 32% to Rs2.92 billion compared with Rs4.30 billion during the same quarter of the previous year, due to higher input costs.
"Production cost in the quarter increased by around 30% as prices of raw materials, mainly coking coal, surged in the international market. However, prices of steel increased by around 13% and that hurt our net profit," said Seshagiri Rao, joint managing director, JSW Steel.
However, the Sajjan Jindal-led company managed to register growth in production and net sales. The company's crude steel production rose 11% to 1.64 million tonnes (MT), while net sales were up by 26% to Rs57.51 crore.
The company also plans to set up a 2.3MT/annum cold-rolling mill complex at its Vijaynagar plant (in Karnataka) to grab growing demand for flat products from the auto sector.
JSW Steel will invest Rs40.25 billion for this project. The steelmaker says that Rs13.50 billion will be raised through internal accruals, while Rs26.75 billion will accrue from debt.
The first phase of this project is scheduled to be completed by June 2014; the second phase is expected to be completed by June 2015.
JSW Steel will take technical assistance from Japan's steel major JFE for the project.
The company said its expansion programme to increase annual production capacity at Vijaynagar from 7.8MT to 11MT by March this year is "on schedule".
In the next fiscal, the company will require 7MT to meet higher production targets. Currently, it needs 5MT of coking coal, annually. However, the shipments of the commodity have been impacted due to the floods that have swamped Queensland, Australia.
"Not every mine and port has been hurt due to the floods. There are a few mines and ports that have not been affected. But yes, shipments have slowed down," said Mr Acharya.
JSW Steel imports around 100% of its coking coal requirements-most of it comes from Queensland.
Talking about the acquisition of Bellary Steel and Alloys Limited, Mr Rao said, "We have made payments and the matter is in court."
But Mr Acharya added, "It's a small technical matter, and we hope that it will be sorted out quickly."