Hit by rising raw material costs, country's largest steel maker Steel Authority of India (SAIL) today reported a 33.9 per cent dip net profit at Rs 1,107.47 crore for the third quarter of 2010-11 though it registered record sales.
Talking to reporters after announcing the results, SAIL Chairman C S Verma said skyrocketing raw material prices have largely impacted on the bottomline of the company, which had recorded Rs 1,675.55 crore net profit in the same quarter last fiscal.
"Coal prices could alone have impacted Rs 1,205 crore. But due to various measures taken by the company, impact have been reduced to Rs 908 crore," Verma said, adding the prices zoomed to $205 per tonne against $128 a tonne in the corresponding quarter last fiscal.
However, the price of coking coal is currently hovering at around $260-265 a tonne due to various factors including floods in the Queensland province of Australia. India relies much on the imported coal from Australia to meet its demand-supply gap.
SAIL requires around 15 million tonnes of coking coal a year. Only 4.5 million tonnes is met through domestic sources and the remaining 10.5 million tonnes comes from imports, around 60 per cent of which comes from Australia.
Verma said that floods in Australia would not impact SAIL in the last quarter of the current fiscal as the company was sitting on sufficient inventory.
"However, if the situation continues for long (flood), it will affect SAIL. We are taking certain strategic measures, but I won't tell you," Verma said. He also refused to comment on the current raw material inventory level of the company.
The gross sales turnover of the company in the reporting quarter were up by 17.5 per cent to Rs 12,276.81 crore over the corresponding period last year buoyed by increased sales, which increased to 3.25 million tonnes in Q3 FY11, a growth of 10.7 per cent over Q3 FY10.
Commenting on steel prices, SAIL Chairman said they have already firmed up by an average of 4-5 per cent and coking coal prices would determine where the prices would head to in the coming months for the company.
To a query on International Coal Ventures (ICVL) bidding for a stake in Australia's Riversdale mines, Verma, also the Chairman of the venture, said that the ICVL Board will meet on January 22 to consider the preliminary reports submitted by merchant bankers.
He declined the possibility of SAIL bidding for ICVL solo saying," If, at all, bidding has to be done, it will be by ICVL only". ICVL is a consortium of five state-run companies including SAIL, CIL, NMDC, RINL and NTPC formed for mining assets' acquisition overseas.
On bidding for iron ore reserves in Afghanistan and Mongolia, Verma said that it was for ICVL to take the call.
