- Q2 turnover at Rs. 10730 crore 10% higher than Q1, lower by 21% YoY
- Record Q2 sales of over 3 million tonnes; 14% growth
- Value-added steel production up 15% in Q2, 18% in H1
- Best-ever Q2 techno-economics
- Record Q2 capex of Rs. 2450 crore, more than double of CPLY
The unaudited financial results of Steel Authority of India Limited (SAIL) for July-September (Q2) of FY ’10, taken on record by the company’s Board of Directors here today, showed profit after tax (PAT) at Rs. 1,663 crore, an improvement of 25% in performance over the previous quarter, lower by 17.3% over the corresponding period last year (CPLY).
Performance in Q2 improved over the previous quarter (Q1 FY ’10) with the help of several management initiatives contributing nearly Rs. 700 crore, resulting in best-ever Q2 sales and special steel production, substantial additional realisation from sales of secondary products and all-round cost efficiency.
The adverse impact due to lower price realisations in Q2 FY ’10 over CPLY was of the order of Rs. 3,000 crore. This could be partially offset through several internal actions which resulted in 14% increase in sales volume, 15% increase in value-added steel production, best-ever key techno-economic parameters, viz. coke rate, total energy consumption, blast furnace productivity, and prudential financial management. Together with this, substantial reduction in operating costs, repair and maintenance, stores & spares, administrative expenses, etc., resulted in overall savings of over Rs. 1,000 crore in Q2.
The company’s capital expenditure of Rs. 2,450 crore in Q2 has been more than double of CPLY. During H1, it touched Rs. 4,920 crore – 2.5 times that of H1 FY ’09.
SAIL’s Q2 turnover at Rs. 10,730 crore was 20.8% lower than CPLY mainly due to sharp drop in YoY steel prices. Q2 profit before tax (PBT) of Rs. 2,519 crore and PAT of Rs. 1,663 crore were lower by 18% and 17% over CPLY respectively on account of factors such as lower realisations, escalation in input prices including rail freight, imposition of ad valorem royalty on minerals, fuel surcharge, etc., and higher interest charges. H1 turnover at Rs. 20,481 crore and PBT at Rs. 4,529 crore were 20% and 22.7% lower than CPLY respectively.
During the quarter, SAIL’s net worth has risen by Rs. 1,825 crore to over Rs. 31,000 crore as on 30.9.09 – an increase of Rs. 3,151 crore over net worth as on 31.3.09.
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With SAIL’s integrated steel plants producing over 1.2 million tonnes or 15% higher volumes of special/value-added steels over CPLY in Q2, production of these high value items crossed 2.3 million tonnes in H1, a growth of 18% over CPLY. SAIL’s captive power output went up by 10% during the quarter and 22% during H1.
With domestic sales growing 12.1% to touch the 3 million tonne mark in Q2, SAIL achieved 8% growth in H1 sales within the country at 5.6 million tonnes. Exports more than doubled in Q2, taking total SAIL shipments to over 0.16 million tonnes in H1. Substantial growth was recorded in sales of products such as HR coils/skelp (20%), wire rods (27%), structurals (19%), galvanised products (8%) and plates (7%).
Towards raw material security, significant progress has been made. For Rowghat mine at Chhattisgarh, after all statutory clearances, lease deed agreement has been signed on 21st October ’09, an issue which was pending for more than two decades. This will provide iron ore security to Bhilai Steel Plant for around the next 30 years. Regarding Chiria/Gua mines, there has been a major positive development with the Jharkhand government conveying its ‘in-principle’ approval for renewal of the biggest of Chiria/Gua iron ore leases, viz. Budhaburu with a reserve of about 810 million tonnes of iron ore (area 823.8 hectares). SAIL has further requested the Jharkhand government to renew additional leases of Chiria/Gua to meet the company’s iron ore requirements for its growth plan in the broader national interest.
The company is also developing two new coking coal blocks at Sitanala and Tasra for its captive use. Environment clearance for Tasra coking coal block of 4 million tonne per annum capacity has been received in October ’09 and the company is geared to start some mining operations in the next few months.
Commenting on the company’s performance, SAIL Chairman Mr. S.K. Roongta said: “While the overall demand growth for steel products in the country is encouraging, SAIL will continue its rigorous efforts in achieving higher all-round cost efficiencies, better techno-economic parameters, improved production/productivity and thrust on value-added products.”