SAIL head sees firm steel prices globally

Steel Authority of India Ltd chairman V S Jain Friday said he expected global steel prices to remain firm in the near future. He said he saw SAIL output and sales growth at 5-6 per cent in 2004-05 (April-March).

"We expect the industry to grow by 5-6 per cent this year. Our sales and production will also grow by 5-6 per cent as we had said in the beginning of the year," Jain said at a press conference here to announce its July-September earnings.

SAIL, the country's largest steel producer, yesterday announced its second quarter results, posting an impressive 200 per cent year-on-year growth in net profit to Rs 1,513 crore.

During April-September, SAIL trimmed its debt by about Rs 1,783 crore, reducing its outstanding debt to Rs 6,906 crore.

The fall in debt level helped the state-owned company improve its debt to equity ratio to 0.94:1 on September 30 from 1.86:1. on April 1.

"We are comfortable with the current debt to equity ratio. We would not like to cross it," Jain told reporters. SAIL plans to retire an additional Rs 300-400 crore of debt over the next six months of the fiscal.

"Our concentration will be on technological upgradation and investment. We will repay whatever debt matures in the next six months," he said.

Jain said the company would invest around Rs 25,000 crore over the next seven to eight years to increase production to 20 million tonne from 13 million tonne.

During the current fiscal, SAIL would invest around Rs 1,500 crore in new projects.

Jain said a majority of the investments would be funded through internal accruals, which are currently at about Rs 6,000 crore.

SAIL improved its domestic sales by 2.4 per cent during April-September to 4.38 million tonne.

The company, however, restricted its exports by over 72 per cent during the period to 174,000 tonne to ensure higher supply of steel in the domestic market.

"I am sure the board will consider the question of interim dividend. This issue will be seriously considered in the next few months," Jain said, when asked whether the company would announce a dividend considering its improved performance.

He said prices of raw materials are expected to remain high in the remaining part of this fiscal, which would also keep steel prices "buoyant".

SAIL's expenditure on raw materials increased 28.5 per cent to 39.87 billion rupees during the first half.

Jain, however, expects realisations to improve as the company shifts majority of its production to finished steel from semi-finished steel.

Jain said the share of finished steel as a percentage of total production had risen to 84-85 per cent , and which he expects to increase to 95 per cent by 2011.

He said the company hopes to improve upon the first half production during the second half of the year.

Yesterday, SAIL shares closed at Rs 49.40 on the National Stock Exchange, down 1.4 per cent over Thursday.