SAIL net doubles to Rs 1,676 cr

Steel Authority of India Ltd (SAIL) has posted robust results with its profit nearly doubling to Rs 1,675.55 crore for the October-December quarter on account of improved sales, cheaper input cost and low base.

“Our sales volume has gone up by about 24.5 per cent to 2.9 million tonnes in the third quarter of the current fiscal compared to that in the same quarter of the previous year. Our cost of imported coal was much lower in the quarter,” SAIL Chairman and Managing Director SK Roongta told reporters in New Delhi.

Low base

The low base effect also contributed to almost 99 per cent increase in profit. The company had a net profit of Rs 843.34 crore during October-December 2008. However, Roongta said he anticipated a hike in steel prices due to pressure on input cost. “If the contracted rates for coal for the next financial year are higher, it will exert pressure on input cost and may lead to increase in prices,” he added.

SAIL also declared a dividend of Rs.1.60 per share for 2009-10. The company pays over $100 a tonne this fiscal to companies from which it is importing coal. In 2008-09, SAIL had bought coking coal at a contracted rate of about $300 a tonne. It is undertaking a massive Rs 70,000-crore expansion to take capacity to 23.2 million tonnes from 14 million tonnes now. The state-run company is planning Rs 12,000-13,000 crore capital expenditure in the next financial year.

Roongta said the company hoped to improve output and sales in the March quarter as demand from automobile and construction sectors was expected to pick up.

“There is generally good demand. We expect to improve our production and sales during the current quarter. We have to reckon to the fact that overall global capacity utilisation is still at lower levels. Increased demand will be met out of increased supplies,” the chairman added.

Further to the wide-ranging economic relationship between India and Korea, SAIL signed a Memorandum of Understanding with Korea Export Insurance Corporation (KEIC). The MoU seeks to establish the framework of co-operation in supporting and encouraging trade and/or investment in the field of industries where SAIL is involved and related business for the development of such industries. The MoU was signed by Soiles Bhattacharya, Director (Finance)/SAIL and Ryu, Chang-Moo, Chairman & President/ KEIC).

The MOU also seeks to establish a strategic alliance in exchange of information and experience with respect to related industries and collaboration between the two parties.

“Steel price should stabilise at current levels”

SAIL has recently said that steel prices should stabilise at current levels after hikes in recent months.

“Prices have been raised and we don’t see any further rise in steel prices,” Roongta said on the sidelines of an international conference on refractory industry.
On February 2, SAIL had raised prices of flat products by Rs 500 per tonne.

Recently, Tata Steel’s MD, HM Nerurkar, had also indicated that steel prices are likely to stay stable till March. “Prices of long products had risen sharply in December after which there was some correction and we don’t see prices going up again,” he said.
Meanwhile, Roongta informed that SAIL’s 50:50 joint venture, S&T Mining, with Tata Steel has been shortlisted by Coal India Ltd. “Coal India had invited Expression of Interest and our joint venture, S&T Mining, has been short listed,” Roongta added.

SAIL and Tata Steel had formed the joint venture in 2008 with an aim to scout for and develop coal mines to secure a key energy source for their respective existing and planned steel capacities.
When asked about International Coal Ventures, the special purpose vehicle formed by several PSUs to acquire coal properties abroad, Roongta said it had made little progress till date. However, he said, that they have not yet made any decision to exit the joint venture.

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