JSW Ispat narrows quarterly net loss to Rs 130.74 crore on deferred tax gains

JSW Ispat Steel has narrowed its standalone net loss to Rs 130.74 crore in the quarter ended December as the company claimed a deferred tax gains of Rs 111 crore and was benefited by over 13 per cent decline in interest outgo.

The company, whose shareholders recently gave their nod to merge it with JSW Steel, had reported a net loss of Rs 308.87 crore in the October-December quarter of 2011-12.

The company follows July-June as its financial year.

Net sales of the company was up 4.48 per cent at Rs 2,678.37 crore during the quarter vis-a-vis Rs 2,563.60 crore of the same period in 2011-12, it said in a filing to Bombay Stock Exchange (BSE).

Its total expenditure, at Rs 2800.21 crore, in the quarter accounted for over 104 per cent of net sales.

However, it was able to narrow down the loss due to accounting of Rs 111.05 crore deferred tax in its books and 13.53 per cent decline in the interest burden at Rs 247.51 crore during the quarter.

Its other income also rose by 17.56 per cent to Rs 117.63 crore during the quarter.

Company's auditors, though, in their limited review report said JSW Ispat has recognised net deferred tax asset of Rs 2,221.92 crore (including Rs 111.05 crore of the quarter) on unabsorbed depreciation and brought forward business losses upto December 31, 2012 based on the future profitability projections of the management.

"We are unable to express an opinion on virtual certainty of these projects as required by Accounting Standard 22, Accounting for taxes on income and the consequential impact, if any, of the recognition of such deferred tax asset," S R Batliboi and Co, the company's auditor, said.

They added that "had the impact of the above item been considered, the loss for the quarter would have been Rs 2,352.66 crore instead of the reported net loss of Rs 130.74 crore."

On auditor's observation, the company management said that it is "virtually certain that there would be sufficient taxable income in future to claim the above tax credit" as it is banking on merger with JSW Steel.

The proposed merger was approved by company shareholders last month and now it is waiting to be approved by JSW Ispat's creditors and Bombay High Court.

Shares of the company fell 0.73 per cent on Monday to close at Rs 10.92 apiece on the BSE.