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31 October 2009 at 21:50 IST
SAIL net profit falls by 17%
NEW DELHI (Commodity Online): India’s biggest steel maker, SAIL, reported a 17 per cent dip in net profit at Rs 1,663.49 crore for the second quarter due to lower sales realisation and the merger of Bharat Refractories Ltd (BRL) with it.
The steel maker had a net profit of Rs 2,009.60 crore during the same quarter last year. The better-than-expected result of the current quarter is not comparable with that in the same quarter last year, as the current quarter figures include the earnings of BRL, which was merged with the company pursuant to the government order in July, a press note issued by the company said.
Biggest impact on the profit was on account of lower price realisation. Last year, in the second quarter, steel prices were at historic peak, SAIL chairman SK Roongta said.
The adverse impact due to lower price realisations in the reporting period over that of a year ago was to the tune of Rs 3,000 crore.
However, the company is hopeful of a better third quarter, as demand and prices almost bottomed in the year-ago period.
The government’s thrust on the infrastructure sector will give a fillip to steel demand in this fiscal. The impact of the decline in prices was partially offset by cost saving measures taken by the company. Demand from sectors such as automobiles and white goods is also encouraging.
SAIL saved around Rs 1,000 crore in Q2 on account of the cost saving measures. After touching a low of about $400 a tonne during the third quarter last year, steel prices are now hovering in the range of $600-700 per tonne. The rates have peaked at about $1,200 a tonne in the Q2 last year.
Total income during the quarter under review stood at Rs 10,575.28 crore, while the same was at Rs 12,488.58 crore in the corresponding period last year.
Out of about Rs 10,000 crore capital expenditure planned for this year to fund its expansion programme, SAIL has already raised about Rs 3,600 crore.
The company plans to raise Rs 1,400 crore of the capex in this year. In the first phase of its expansion programme, the company is augmenting its annual production capacity from about 14 million tonnes to 23 million tonnes by 2012.
In the second phase, it will ramp up the capacity by another three million tonnes, he said.
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