State-owned Steel Authority of India (SAIL) today said its profit for the first quarter of the current fiscal declined by 11.57 per cent to Rs 1,176.55 crore mainly due to lower sales and high input cost.
"In the first quarter, the input cost was up by 42-45 per cent than the year-ago period. Our sales in terms of volume was down by 0.46 million tonnes at 2.32 million tonnes.
"Besides this, there was a performance related pay to our employees for the last three years, which amounted to Rs 299 crore. This has also reflected in our results," SAIL Chairman C S Verma told PTI.
The country's largest steel maker had posted a net profit of Rs 1,330.43 crore in the same quarter a year ago. SAIL quantified the increase in input cost at Rs 556 crore of which Rs 368 crore was on account of imported coal.
The steel maker has rich reserves of iron ore but lacks in that of coking coal, both vital raw materials in making steel.
Verma said, the impact of the high input cost pressure was "partially neutralised by better product-mix, higher production of value-added steel items and savings achieved through management initiatives".
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Verma added, "Our average sales realisation improved in the first quarter to Rs 34,000 a tonne as compared to Rs 31,000 a tonne a year-ago." The company's net sales for the reporting period stood at Rs 9,133.32 crore as against Rs 9,163.41 crore in the first quarter last fiscal.
However, SAIL is positive on the outlook and is anticipating demand pick up in the coming months.
"Now, steel prices are firming up. There is an upward pressure on the prices. Demand in August-September is bound to improve mainly from sectors like automobile and construction," he said.
When asked if the company is looking at increasing steel prices next month, he said the rates would depend on demand and supply scenario.
SAIL, which is undertaking a Rs 70,000 crore expansion programme to take up its annual production capacity to about 23 million tonnes from the current 14 million tonnes, would spend Rs 12,254 crore in the current fiscal as against last fiscal's Rs 10,606 crore.