The unaudited financial results of Steel Authority of India Limited for July to September 2009 of FY 2010, taken on record by the company’s board of directors, showed profit after tax of INR 1,663 crore an improvement of 25% QoQ but lower by 17.3% YoY.
Performance in Q2 improved over the previous quarter with the help of several management initiatives contributing nearly INR 700 crore resulting in best-ever Q2 sales and special steel production, substantial additional realization from sales of secondary products and all round cost efficiency.
The adverse impact due to lower price realizations in Q2 FY 2010 over CPLY was of the order of INR 3,000 crore. This could be partially offset through several internal actions which resulted in 14% increase in sales volume, 15% increase in value added steel production, best ever key techno economic parameters viz coke rate, total energy consumption, blast furnace productivity, and prudential financial management. Together with this, substantial reduction in operating costs, repair and maintenance, stores & spares, administrative expenses, etc resulted in overall savings of over INR 1,000 crore in Q2.
SAIL’s capital expenditure of INR 2,450 crore in Q2 has been more than double of CPLY. During H1, it touched INR 4,920 crore 2.5 times that of H1 FY 2009.
SAIL’s Q2 turnover at INR 10,730 crore was 20.8% lower than CPLY mainly due to sharp drop in YoY steel prices. Q2 profit before tax of INR 2,519 crore and PAT of INR 1,663 crore were lower by 18% and 17% over CPLY respectively on account of factors such as lower realizations, escalation in input prices including rail freight, imposition of ad valorem royalty on minerals, fuel surcharge, etc and higher interest charges.
With SAIL’s integrated steel plants producing over 1.2 million tonnes or 15% higher volumes of special/value added steels over CPLY in Q2, production of these high value items crossed 2.3 million tonnes in H1, a growth of 18% over CPLY. SAIL’s captive power output went up by 10% during the quarter and 22% during H1.
With domestic sales growing 12.1% to touch the 3 million tonne mark in Q2, SAIL achieved 8% growth in H1 sales within the country at 5.6 million tonnes. Exports more than doubled in Q2, taking total SAIL shipments to over 0.16 million tonnes in H1. Substantial growth was recorded in sales of products such as HR coils/skelp 20%, wire rods 27%, structurals 19%, galvanized products 8% and plates 7%.
Towards raw material security, significant progress has been made. For Rowghat mine at Chhattisgarh, after all statutory clearances, lease deed agreement has been signed on October 21st 2009 an issue which was pending for more than two decades. This will provide iron ore security to Bhilai Steel Plant for around the next 30 years. Regarding Chiria/Gua mines, there has been a major positive development with the Jharkhand government conveying its in principle approval for renewal of the biggest of Chiria/Gua iron ore leases viz. Budhaburu with a reserve of about 810 million tonnes of iron ore. SAIL has further requested the Jharkhand government to renew additional leases of Chiria/Gua to meet the company’s iron ore requirements for its growth plan in the broader national interest.
The company is also developing two new coking coal blocks at Sitanala and Tasra for its captive use. Environment clearance for Tasra coking coal block of 4 million tonne per annum capacity has been received in October 2009 and the company is geared to start some mining operations in the next few months.
Mr SK Roongta chairman of SAIL said that “While the overall demand growth for steel products in the country is encouraging, SAIL will continue its rigorous efforts in achieving higher all round cost efficiencies, better techno-economic parameters, improved production/productivity and thrust on value-added products.”
