SAIL Q1 Sales Increase, Profit Decreases
08/01/2011 - The unaudited financial results of SAIL for April-June (Q1) of the current financial year showed 19.7% growth in sales turnover compared to the corresponding period last year. Due to a sharp increase in input costs, however, profit after tax was lower by 29%.
The unaudited financial results of Maharatna Steel Authority of India Ltd. (SAIL) for April-June (Q1) of the current financial year showed 19.7% growth in sales turnover, at Rs. 11,891 crore, compared to the corresponding period last year. Due to a sharp increase in input costs, however, profit after tax at Rs. 838 crore was lower by 29% compared to last year’s Q1.
During Q1, SAIL had to bear additional expenditure of nearly Rs. 580 crore on cost of coal alone. Of this, around Rs. 422 crore was on account of higher cost of imported coking coal, with prices rising from $200 per tonne in Q1 last year to $330 in Q1 of FY'12. The company registered profit before tax of Rs. 1,229 crore, 29.7% lower than the same period a year ago.
The impact of higher cost was partially neutralized by better product-mix, higher sales, and savings achieved through management initiatives, according to SAIL.
Operating at 110% of rated capacity, SAIL plants maintained production of saleable steel at the same level of 3.044 million tonnes as achieved in Q1 last year despite shutdown of two blast furnaces for capital repairs during April-June 2011. Higher production was recorded in items such as hot-rolled plates (12%), ERW (electric resistance welded) pipes (14%), cold-rolled coils/sheets (9%), medium structurals (7%), hot-rolled coils (6%), and rails (2%). SAIL also achieved its highest-ever Q1 production of crude steel through continuous casting, at 2.35 million tonnes, showing a growth of 5% over last year’s Q1.
At 2.75 million tonnes, sales of steel by SAIL were 18% higher than the same period last year, with domestic sales growing at 17% to 2.67 million tonnes and 131% increase in exports at 84,000 tonnes. Q1 saw sales growth in value-added items such as wire rods (65%), galvanized products (43%), hot-rolled coils (30.6%), pipes (28.5%), and railway materials (10%).
Growth of 21% in sales through the company's countrywide dealer network also contributed. Branded products such as SAIL-JYOTI (galvanized plain and corrugated sheets) and SAIL-TMT (rebars) witnessed sales growth of 57% and 9.5%, respectively, through this distribution channel. During Q1, 51 new dealers were added to SAIL's dealer network.
Responding to the Q1 results, SAIL Chairman C.S. Verma said: “With coking coal prices expected to moderate in the coming months due to stabilization of production in Australian mines that were affected by floods, we are hopeful that our cost burden will ease in the following quarters of this financial year. Also, though steel prices have remained stable and demand for steel subdued so far, we are looking at domestic demand growing progressively in the latter half of FY'12.”
