December 02, 2008

Costs putting pressures on SAIL margins

Bloomberg reported that Steel Authority of India Limited, while reporting its quarterly results, expressed concern on increasing input costs.

Mr SK Roongta chairman of SAIL in an interview said that “We were paying USD 98 tonnes of coking coal. That has gone up threefold to more than USD 300 tonnes. Shipments at new contract rates began in July so there will be pressure on margins.

He said that “We have been able to register growth because we increased output of value added steel and improved efficiencies. But fixed costs are increasing. We need to raise prices to maintain margins.''

He added that “You have to take into account the base effect. In absolute terms, it will still continue to be higher so there's no cause of concern. As far as India is concerned, we continue to need more and more steel. We are concentrating on ramping up our capacity.''