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Higher royalty rates and expensive power pushed Steel Authority of India (SAIL) into a net loss of Rs 321.6 crore in the April-June period, against a Rs 530-crore profit in the same period last year. The government-owned behemoth previously reported a quarterly loss in December 2012. In the last quarter (Jan-March) of the year 2014-15, it posted a net profit of Rs 334 crore.
However, saleable production, crude steel and hot metal production saw growth of six per cent, 11 per cent and 14 per cent, respectively, compared with last year's corresponding quarter.
In spite of this, gross turnover at Rs 10,552.4 crore were lower by 15.7 per cent, against the corresponding period last year.
"This has been primarily due to a 15.3 per cent dip in net sales realisation, which affected the bottom-line with a consequent net loss of Rs 321.6 crore," the company said.
Though domestic steel consumption witnessed growth of about seven per cent in the June quarter, the country also witnessed an unprecedented increase in imports from China, Japan, Korea and Russia, among others, by 54 per cent.
According to SAIL, this eroded a large market chunk of the domestically produced steel. "Lower exports from India, which fell by 31 per cent in the first quarter, further affected the demand-supply balance,' it said.
According to Kumar Kandaswami, senior director, Deloitte, said the increase in customs duty earlier this week would come as a relief to the domestic manufacturers. "Given the lukewarm demand within China, there was the danger of low priced steel threatening Indian manufacturers. With the growth in imports crossing 50 per cent last few months, the threat required urgent action. Therefore, this step is timely. The low demand - high capacity situation is likely to continue for a while making the threat of dumping imminent."
SAIL, JSW Steel and Essar Steel had last month sought imposition of safeguard duty on imported steel. They petitioned the directorate general of safeguards.
