Sail reports Rs 322 crore loss, in red after 12 years

0
10 views

Steel Authority of India (SAIL) on Friday reported losses after a gap of over 12 years. The company on Friday reported a standalone net loss of Rs 321.64 crore for the June quarter against a net profit of Rs 530 crore in the year-ago period, owing to subdued sales and prices of alloy and higher costs. Given the persisting threat of cheap imports from China, Russia, Korea and Japan, it would be imperative for SAIL to improve its product-mix and prune costs to return to profitability, analysts said.

In the previous quarter, SAIL reported a net profit of Rs 334.22 crore. SAIL last reported losses (of Rs 78.75 crore) in the third quarter of 2002-03. After touching 52-week low of Rs 53.95 in morning trade, the SAIL stocks closed 0.53% higher at Rs 56.40 on BSE. Steel secretary Rakesh singh, who is also holding the additional charge as SAIL chairman, said the company’s thrust would be on maximising production of value-added products to get the benefit of increased infrastructure spending in the near future.

SAIL’s total income fell 16% to Rs 9,502.80 crore in the April-June quarter from Rs 11,341.20 crore in the same quarter a year ago. While the sales fell 2.28% to 2.691 MT in the quarter, net sales realisation fell 15.3%, largely due to the subdued price of the alloy. HR coil prices in India have fallen by over 23% in a year to Rs 28,800 per tonne while the prices of TMT bars declined by 24% to Rs 34,450 a tonne. Though raw material consumption, power and fuel costs, depreciation charges and employee benefit expenses were higher in the quarter year-on-year, total expenses were lower at Rs 10,010.55 crore against Rs 10,619.32 crore in the year-ago period.

Higher finance costs, which rose to Rs 443 crore against Rs 305 crore a year ago, added to the losses. “This is one of the toughest time for the steel industry. All steelmakers are passing through this critical phase, mainly due to the low-cost imports particularly from China. Going forward, the yuan fall is likely to aggravate the situation further in the near-term,” said Anjani Agrawal, Partner and India Leader (Metals and Mining), EY. Value-added product’s contributed just 42% of SAIL’s total sales during the quarter. This compares poorly with Japanese and Korean steelmakers produce over 80% of value-added products in any year out of their total production. Owing to a global demand crunch, excess steel produced in many countries is increasingly being dumped into India.

While Japanese and Korean steelmakers are taking advantage of the free trade pacts with India, for Chinese steelmakers exports are a must to remain afloat. The devaluation yuan has increased China’s competitiveness, nullifying any potential impact of the recent hikes in import duties. China’s export prices are close to 25% cheaper than domestic steel prices. Imports to India grew by 54% during the first quarter compared to the same period last year.

This eroded a large share of the domestically produced steel. The Maharatna steel company has five integrated steel mills with around 17 MT annual capacity and has close to one lakh employees.

source:http://www.financialexpress.com/

Related Posts Plugin for WordPress, Blogger...
SHARE
Nagaraju Tadakaluri
Nagaraju Tadakaluri is a Professional Web Designer, Freelance Writer, Search Engine Optimizer (SEO), Online Marketer, Multi Level Marketer (MLM) and Business Promoter. Have developed Latest Updates in hopes to educate, inform and inspire.