SAIL posts Q1 profit after tax of Rs 1,177 cr

Notwithstanding sluggish market conditions, Steel Authority of India Limited (SAIL) recorded a sales turnover of Rs. 9,931 crore during April-June (Q1) of the current financial year, showing an increase of nearly 2% over the corresponding period last year (CPLY). SAIL registered profit before tax (PBT) of Rs. 1,749 crore and profit after tax (PAT) of Rs. 1,177 crore, which were respectively 13% and 11.5% lower than CPLY. The company’s profitability was affected by different factors, including sharp input cost escalations and lower volume of sales. The unaudited financial results of SAIL for Q1 were taken on record here today by the company’s Board of Directors.

In Q1, SAIL’s cost on employees increased due to additional provision of Rs. 299 crore towards employee-related benefits, compared to net reversal of Rs. 199 crore in CPLY towards provision for revision of salaries & wages. In addition, the adverse impact of increase in prices of inputs such as coal, ferro-alloys, nickel, etc., during Q1 amounted to Rs. 556 crore (Rs. 368 crore on account of imported coking coal alone). These factors were, however, partially neutralised by better product-mix, higher production of special/value-added steel items and savings achieved through management initiatives. SAIL plants produced best-ever 1.18 million tonnes (MT) of special/value-added products during Q1, registering a growth of 3% over CPLY.  

Modernisation & expansion plans of SAIL are going on in full swing with annual capital expenditure of Rs. 12,254 crore planned for the current fiscal. In the last financial year, capital expenditure of Rs. 10,606 crore was incurred. The modernization plan has entered a new phase with the entire upcoming facilities at Salem Steel Plant of SAIL in readiness and hot trials of the same scheduled by the end of this month itself. The major facilities coming up in this phase here include Electric Arc Furnace, Ladle Furnace, AOD convertor, Slab Caster and a new Sendzimer mill.   This will add 0.18 million tonnes of high-value stainless/alloy steel products in the SAIL product-mix basket. 

Another major project completed during the period has been upgradation of Blast Furnace-2 at Bokaro Steel Plant at a cost of over Rs. 800 crore. This includes increasing its working volume from 1,758m3 to 2,250m3 for higher productivity level of 2 tonnes/m3/day by incorporating state-of-the-art technology.

The multi-pronged strategy being adopted for the coming months includes emphasis on input security, expansion of marketing network and cost-competitiveness. To achieve these objectives, SAIL is taking steps for expansion of existing captive coal mines at Chasnalla, Jitpur and Ramnagore, and development of new mines at Tasra and Sitanala. Coal production of 3 lakh tonnes from the company’s captive mines of SAIL at Chasnalla, Jitpur and Ramnagore registered 18% growth and was the best-ever in Q1. In the coming quarter, SAIL would firm up the modalities of strategic alliance with POSCO for Finex process plant at Bokaro. On technology front, alliances with Kobe Steel and Nippon are also expected to make further headway.

Announcing the Q1 results, SAIL Chairman Mr. C.S. Verma said: “Greater availability of steel worldwide coupled with pressure on demand made the market conditions quite testing for steel companies in the first quarter. With signs of stability in prices and demand picking up in the country, we are optimistic about the ensuing quarters.”