Tax write-back boosts JSW Steel net 21.5%

MUMBAI: Despite a steep revenue fall, alloy major JSW Steel on Wednesday reported a 21.51 percent jump in consolidated net at Rs 2,536 crore for the quarter to September, mainly due to a write-back of deferred taxes and an accrued incentives from previous years.

Revenue from operations plunged 18.5 percent to Rs 17,572 crore from Rs 21,552 crore in the year-ago period, due to weak seasonal demand and poor prices.

"We had deferred tax writeback to the tune of Rs 2,150 crore on standalone basis and Rs 2,207 crore on a consolidated basis, boosting the bottomline," joint managing director and group CFO Seshagiri Rao told reporters.

However, he was quick to say that the company will not adopt the new lower corporate tax rate announced by the government in August as the company has Rs 4,500 crore accumulated in MAT.

"We have assessed the impact of the taxation law (amendment) Ordinance of 2019 (which reduced the levy to flat 25.17 percent) and decided to continue with the existing tax structure until we utilized the accumulated minimum alternative tax credit (MAT) of Rs 4500 crore," Rao said.

Rao explained that the tax write-back was due to a reestimation of the deferred tax liability assuming that the company would migrate to the new tax regime at a future date.

He also noted two of its subsidiaries have opted for the new tax regime, while the rest of the companies including JSW Steel would move into the new regime at a future date.

Income from operations also include Rs 466 crore of grant income from Maharashtra government for expansion of the Dolvi plant which it took over from Ispat Industries in 2013. "Ispat had received the tax incentive from the state while setting up the 3.3 mt plant, which expired this August.

In May 2016, when we expanded the capacity to 5 mt, we had applied for the incentives and the same came in September and is thus included as the income from operations," he said.

The company had recognised a grant income of Rs 512 crore during the quarter, including Rs 36 crore pertaining to the June quarter and Rs 466 crore in relation to earlier years from 2016.

During the quarter, standalone crude steel production stood at 3.84 million tonne, down 8 percent. Consequently, saleable steel sales for the September quarter declined 9 percent to 3.6 mt.

To partially mitigate the headwinds of weak domestic demand, we tactically increased exports, which surged 68 percent to 1.09 mt, accounting for 31 percent of consolidated saleable steel sales. On consolidated basis, volume stood at 3.56 mt, down 9 percent, Rao added.

After swinging over 330 points in a choppy session on Wednesday, the 30-share BSE Sensex ended 94.99 points, or 0.24 per cent, higher at 39,058.83. It hit an intra-day high of 39,196.67 and a low of 38,866.08. The broader NSE Nifty too advanced 15.75 points, or 0.14 per cent, to settle at 11,604.10. Meanwhile, he Indian rupee rose 3 paise to close at 70.91 against the US dollar on Wednesday