Despite fall in iron ore and coking coal prices globally, the same trend is not seen in India, says Seshagiri Rao, joint MD and group CFO, JSW Steel.
International iron ore and coking coal prices have seen a fall in recent times and JSW Steel is expected to benefit from the same. But Seshagiri Rao, joint MD and group CFO, JSW Steel says the same trend is not seen in India due to shortage of iron ore. He believes domestic iron ore production is likely to see a deficit of 30 million tonne this year.
He feels the company will have to increase iron ore import from 6 million tonne to 10 million tonne.
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JSW Steel has a sales volume target at 12.4 MT for FY15.
Rao says the company is following a strategy of backward and forward integration and keeps scouting the market for such opportunities. Luchini is one such opportunity and JSW Steel has bid for its rolling plant.
Below is the verbatim transcript of Seshagiri Rao's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Sonia: Iron ore prices globally have hit a new five year low. It is below USD 80 and coking coal cost as well has fallen. How much of this fall in commodity prices will impact a company like JSW Steel?
A: Internationally the prices of both iron ore and coal have come down in the last few months. However, in India unfortunately the same trend is not been shown in the prices of particularly the iron ore due to shortage of iron ore in India. So overall production side iron ore in India in this year is expected to be lower at least by 30 million tonne due to which India has to import iron ore in this year. So to that extent of imports into India, JSW Steel stands to gain.
We have planned initially that every month we import 0.5 million tonne – that is 6 million tonne in this year. However, after having seen severe shortages in India and unreasonable prices in the Indian market, we are now increasing our import of iron ore into India. We are increasing from 6 million tonne to 10 million tonne is what we are planning to do in this year.
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JSW Steel stock price
On September 23, 2014, at 11:10 hrs JSW Steel was quoting at Rs 1252.80, up Rs 2.70, or 0.22 percent. The 52-week high of the share was Rs 1365.35 and the 52-week low was Rs 696.00.
The company's trailing 12-month (TTM) EPS was at Rs 97.49 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 12.85. The latest book value of the company is Rs 970.48 per share. At current value, the price-to-book value of the company is 1.29.
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