SAIL net dips 25% to Rs 1,127 cr

Steel Authority of India Ltd (SAIL) reported a 25.5 per cent decrease in net profit to Rs 1,127 crore for the second quarter ended September compared with Rs 1,513 crore for the corresponding quarter last year, owing to higher tax provision and input prices.

Total Income (net of excise) has increased from Rs 6808.26 crore in Q2-05 to Rs 7156.2 crore for the quarter ended September 30, 2005. V S Jain, chairman, said that increase in input prices - primarily coking coal - has led to some erosion of margins but that he "continues to be bullish" on the outlook for the steel sector in the coming months.

"SAIL today is on a strong footing and is going ahead with steady expansion plan to complete with the best in the steel market," said the chairman of the largest steel company of the country.

The next few weeks should see the complete merger of Indian Iron and Steel Company (IISCO) with the parent company SAIL.

On steel prices, Jain said the rates to had "stabilised" but there was not much possibility of an upswing for the rest of the financial year. Raw input prices seemed to have peaked and the rest of year should see a correction in prices, thereby not hurting company's margins, as feared by some analysts.

"The company's building inventory level was not a cause of concern as it was a temporary phenomenon in wake of steel prices softening', said VS Jain.

SAIL's debt equity ratio further improved to the level of 0.42:1 as against 0.58:1 at the beginning of the financial year. "The company's overall debt has come down by Rs. 565 crore in first half of the year," said Jain.