Business Standard

Steel Sector Sees Rs 800 Crore Capital Erosion

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BUSINESS STANDARD

A survey conducted by the joint plant committee (JPC) reveals that though 15 out 25 steel companies performed better in 2000-01 than in the previous year, capital erosion was in excess of Rs 800 crore.

Sales in value terms grew by over 14 per cent, which has helped in reduction of losses, which was in excess of Rs 2000 crore last year.

The JPC, in its publication Performance Review, Iron & Steel 2000-01, cites lack of large-scale investment in infrastructure projects by the government, excess capacity in select sub-sectors of steel, slump in the economy and poor industrial growth, the general wariness shown by financial institutions in investing, crashing international prices, pressure felt due to dumping action taken and increasing flow seconds from other countries, as the main reasons behind the present state of the industry.

 

The rate of growth in finished steel has dipped to 7.7 per cent in 2000-01 as compared to 14 per cent recorded in the previous year.

The salient features of the industry's performance are, exports recorded a decline for the years as a whole, despite an impressive growth in the first two quarters. Finished steel exports remain almost at the same level in comparison to 1999-2000.

In reflection of the stagnating industrial and capital formation activities in the domestic economy, imports also fell from a level of 1.6 million tonne to 1.4 million tonne in the course of the year.

Export and import of semis which showed an increasing trend over three years also fell in the course of 2000-01. Apparent consumption of finished steel increased by 6 per cent to 26.6 million tonne up from 25.1 million tonne.

R K Prasannan, development commissioner (iron & steel) said, the JPC on its part will endeavour to increase steel consumption in three ways.

JPC will try to influence consumption of steel in construction, penetrating the rural marketing, and influence the steel producers to go in for automotive steel, which is largely being imported.

S Bhattacharya, chief planning manager, JPC said, net realisation has gone down to a great extent and this will adversely affect the profitability of the steel producers.

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First Published: Oct 29 2001 | 12:00 AM IST

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