Input crisis hits SAIL in first quarter

Steel Authority of India Ltd (SAIL), which registered a record production of 11 million tonne last year, suffered a minor setback in the first quarter of the current financial year owing to a raw material crisis.

S K Roongta, director (commercial), said, in the first quarter our production was lower than usual. He, however, clarified that the higher production was planned for the latter half of the year and the company was on course to achieve that.

The target production for the year was pegged at 11.5 million tonne. Roongta was in the city for an interactive session with members of Merchants' Chamber of Commerce (MCC).

During the course of interaction, Roongta said hot rolled coil (HRC) prices were expected to be stable for the next few months. He also pointed out that last four months HRC prices remained stable. But, long-term contracts which had been re-negotiated saw an increase in prices of around 20 per cent.

Roongta emphasised, prices were driven by the market. In this context, he said, it was necessary that the recent increase in coal prices by Coal India would automatically result in steel price increase.

SAIL sources around four million tonne of coal from Coal India, of its total requirement of 13 million tonne. Roongta also said the company was increasingly branding its products. Bhilai Steel Plant had started branding its TMTs and Salem stainless was a brand to reckon with.

Roongta mentioned, SAIL was also tapping the rural market, which had huge potential. This was necessary to increase per capita consumption in India.

According to targets set by the ministry, steel consumption should increase to 40 million tonne by 2006.

To achieve a consumption level of 40 million tonne, fresh capacities would also have to be established""both greenfield and brownfield.

Roongta said the pace of globalisation in Indian steel industry was faster than the roadmap chalked out by the ministry of steel.

However, he also pointed out that steel was a cyclical industry and prices and demand were subject to market conditions.