Jindal Vijayanagar Steel Limited

Press Release

JVSL posts Net Profit of Rs. 225.53 Crores for the 3^rd Quarter 2003-04

Jindal Vijayanagar Steel Ltd. (JVSL) has showed improved performance for the 3^rd Quarter 2003-04. The Company has posted a Net Profit of Rs. 225.53 Crores vis-à-vis Net Loss of Rs. 59.88 Crores in the corresponding quarter in the previous Financial Year.

The Company has shown significant improvement in the performance during the 3^rd Quarter 2003-04 by registering growth in volume of production and sales by around 7% and 10% respectively over the corresponding quarter in the previous financial year 2002-03. The increase in Net Sales Realisation coupled with higher sales volume pushed up the net sales value by around 19% compared to that of the corresponding quarter in the previous financial year.

During the 3^rd Quarter of 2003-04, the production was 3.76 Lacs MT and sales 3.91 Lacs MT. The earnings before interest, depreciation and tax (EBIDTA) reported for the 3^rd Quarter ended 31^st December 2003 is Rs. 255.33 Crores on a total turnover of Rs. 871.01 Crores (net of excise duty Rs. 788.41 Crores). The operating margin achieved during the quarter is 32% of the net sales. The company has made a cash profit of Rs. 140.22 Crores during the current quarter. After providing for interest, depreciation and amortisation, the net profit before tax for the current quarter is Rs. 45.21 Crores. The Company has considered an amount of Rs. 226.28 Crores towards the benefit arisen on account of settlement of outstanding dues of certain foreign lenders, as exceptional item. The net profit after tax, including exceptional item, is Rs. 225.53 Crores, after providing for deferred tax liability of Rs. 45.96 Crores.

While the company had achieved 98% capacity utilisation in HR coil production, for the 9 months period ended 31^st December, 2003, the pellet plant clocked 110% capacity utilisation. The EBIDTA for the period was Rs.735.87 crores for nine months alone, as against Rs.715.30 crores achieved for the full financial year 2002-03. The net profit reported for 9 months was 271.86 crores.

While the Company has affected repayment / pre-payments of Loans to the extent of Rs.163 crores during the quarter, the cumulative repayment/prepayments aggregated to Rs.300 crores in the financial year 2003-04 (for the 9 months period ended 31.12.2003). The cash profits of the company are used to bring down the debt and interest cost.

The effect of the Scheme of Arrangement and Amalgamation between the Company, Jindal Iron & Steel Company Limited and Jindal South West Holdings Limited, on the financial results will be given upon receipt of necessary approvals from the High Courts and authorities concerned.

The outlook for the last quarter of the financial year continues to be robust and the company is confident of sustaining its margins and profitability trend. It is expected that the significant improvement in the operational performance will continue in the later part of the current financial year with its constant efforts for further reduction in the cost of production.

Note:
	1	The figures for the current period of nine months are not comparable with those of corresponding period of the previous year, as the commercial operations of Pellet & Corex-II plants had commenced only in the later part of the corresponding previous year.
	2	As the Company is primarily engaged in the segment of “iron and steel products”, there are no other reportable segments as per Accounting Standard (AS 17)..
	3	(a) Pursuant to the directions of High Court of Karnataka in the matter of Company’s application under section 391 to 394 of the Companies Act, 1956, for “Scheme of Arrangement and Amalgamation” (Scheme) with effect from 1.4.2003, between the Company, Jindal Iron & Steel Company Limited and Jindal South West Holdings Limited, meetings of shareholders and secured creditors of the Company have been convened on 29th January, 2004 for consideration and seeking approval of the Scheme. (b) The Scheme, interalia, includes the following matters which are also part of Revised Restructuring Package, approved by CDR System. i) The conversion of debt of Rs. 456.88 crores into Equity shares of Rs. 10 each. ii) Cancellation of part of existing equity capital to the extent of Rs. 516.40 crores and issue of 0.01% cumulative redeemable preference shares in lieu thereof which, however, would be reconverted into equity share capital to the extent mentioned in the Scheme. (c) The effect of amalgamation on the financial results will be given upon receipt of necessary approvals from the High Courts and concerned authorities.
	4	Paid-up equity share capital as on 31st December, 2003 includes Rs. 61.03 crores being the amount originally paid up on the shares forfeited.
	5	Information on investor complaints (Numbers): Pending at beginning of the quarter - 232, Received during the quarter –5244; Resolved/replied during the quarter - 5230; Unresolved at the end of the quarter - 246 (pending for less than three days) since resolved.
	6	Exceptional item for the current nine months period represents the benefit on account of settlement of outstanding dues (including waiver of principal amount of Rs. 166.83 crores) to certain foreign lenders; and for the previous year, the additional interest expenses on account of revocation of earlier restructuring package.
	7	Sanction letter has been received from Unit Trust of India for settlement of outstanding dues of Rs.603.74 crores and benefits accruing thereof will be accounted for on compliance of the terms and conditions.
	8	Previous periods’ figures have been regrouped/rearranged wherever necessary.
	9	The above results reviewed by the Audit Committee, have been taken on record at the meeting of the Board of Directors held on 20^th January, 2004. and the results for the quarter and nine months period ended 31^st December, 2003 were subjected to Limited Review by the Auditors of the Company.