Essar Steel Cuts Losses By Rs 235 Crore In & #39;00-01

Essar Steel has managed to pare its loss for 2000-01 to Rs 345.9 crore against a historic-high of Rs 581.24 crore in the previous year. Net sales for the year increased to Rs 2,518.83 crore compared with Rs 2,421.84 crore in 1999-00.

The company has attributed the negative impact on the bottomline to the international trend of deteriorating hot-rolled coil prices and the lackluster demand.

On account of a shift in the company's focus to value-added grades and higher sales and production volumes, the company has posted a 64 per cent jump in its operating profit to Rs 607.7 crore compared with Rs 370.07 crore in the previous year.

An high interest cost of Rs 647.07 crore, up from the previous year's Rs 588.09 crore, and depreciation of Rs 239.1 crore saw the company stay in the red.

The company has continued with its cost reduction initiatives with staff cost declining from Rs 51.36 crore to Rs 48.8 crore and its other expenditure from Rs 649.58 crore to Rs 586.01 crore.

In a press release issued by Essar Steel, J Mehra, managing director, said, "While the operations of the company has improved, the stagnating demand and surplus capacity of over 30 per cent in the domestic market have led to severe drop in the HRC prices by over 20 per cent during the year."

The current scenario of oversupply and stagnating demand is likely to continue for the next two years, he added.