India’s largest steel producer, Steel Authority of India Limited (SAIL), on February 9 reported three consecutive quarters of losses due to fall in realisations on weak domestic demand and a flood of low-priced steel imports during the third quarter (October-December).
“The global scenario is very challenging and the demand-supply imbalance, resulting in price adjustments, is hurting the domestic steel industry. We are focused on ramping up production from our new units and are adopting cost-efficient strategies to improve our NSR”, SAIL Chairman P K Singh said.
Singh feels the recent favourable policies announced by the government and its concerted efforts to enhance infrastructure spends in viable sectors will improve domestic demand and provide some relief to the Indian steel industry.
SAIL’s net loss during the quarter stood at Rs 1,528.73 crore as against a net profit of Rs 579.09 during the corresponding period of the previous fiscal. However, on a sequential basis, the net loss during the quarter was up 44.77% as compared to Rs 1,055.96 crore reported in the second quarter of the fiscal
Revenues during the quarter slipped by 19.52% to Rs 8,939.12 crore from Rs 11,107 crore in the same quarter of 2014-15.
On the other hand, total expenditure increased only marginally to Rs 10,320.60 crore in Q3 of 2015 from Rs 9,899.22 crore reported in the same quarter of last fiscal.
In Q1 of 2015-16, the steel conglomerate had reported a net loss of Rs 321.64 crore.
With three quarters of continuous losses, the company’s net loss during the first nine months of 2015-16 (April-December) stood at Rs 2,906.33 crore. In the corresponding period of 2014-15, the company had reported a profit of Rs 1,758.46 crore.
Despite poor financials, the company said in a release that its hot metal production during the quarter rose by 2% as compared to the previous year, whereas crude steel production increased by 4% even as saleable steel production jumped by 14%.
Overall sales volume registered a growth of 6% at 2.906 million tons.
On techno-economic parameters, its blast furnace (BF) productivity registered a growth of 4% while continuous casting growth stood at 6% as compared to the corresponding quarter of the previous financial year.
The net sales realisation was down 24% as compared to same quarter of the previous year.
The performance in Q3 was largely along expected lines on the back of the steep fall in global steel prices to around $280 per ton from a high of around $460 per ton a year ago, mainly due to slowing Chinese consumption which is leading to over-availability of cheap steel into the market.
Imports into India are at an annualised rate of 12 million tons, which is 20% up over a very high base of FY15 when they had surged by 75% over the previous year.
The company said the domestic steel market continues to suffer from the rising imports, particularly from China, Japan and Korea, at prices which are much lower than the domestic cost of production, affecting the margins of steel producers operating in India.
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