Higher input costs and foreign exchange variations impact

Even as public sector steel major Steel Authority of India's (SAIL's) turnover during the first nine months (April-December 2011) of the current fiscal went up by 5 per cent to Rs.35,563.73 crore, its profit before tax and profit after tax were impacted owing to higher input costs and foreign exchange variations.

According to a SAIL statement here, the company's profit before tax and profit after tax during the April-December period were pegged at Rs.2,849.51 crore and Rs.1,965.74 crore, marking a dip of 42.7 per cent and 41.7 per cent, respectively, over the same period of the previous year.

The difference in PBT at Rs.2,120 crore was primarily owing to the impact of coking coal price increase at Rs.1,849 crore and foreign currency variation of Rs.1,079 crore.

SAIL's net worth, however, grew by Rs.2,503 crore to Rs.38,618 crore as on December 31, 2011, and the company's board approved an interim dividend of 12 per cent of the paid-up capital.

Despite the slippage in profit during the nine-month period as compared to the year-ago period, SAIL's performance reflected an uptrend during the third quarter as compared to the preceding quarter.

The steel major's third quarter (October-December 2011) profit before tax at Rs.903.76 crore and profit after tax at Rs.632.12 crore marked a growth of 26 per cent and 28 per cent, respectively, over the previous quarter.

However, when compared with the profit figures of the same quarter of 2010-11, the third quarter profit before tax during the current year was down by Rs.724.44 crore (44 per cent) owing to an impact of Rs.578 crore due to increase in prices of coking coal and Rs.499 crore on account of foreign exchange variation. These two major factors, among others, also brought down the profit after tax by Rs.475.35 crore (43 per cent) on a third quarter turnover of Rs.11,685.95 crore which was 4.8 per cent lower than in the same quarter during the previous year.

During the third quarter this year, the steel major moved a step ahead in its journey to become a global player.

The SAIL-led AFISCO (Afghan Iron & Steel Consortium), which had submitted its bid for mining exploration rights at Hajigak having an estimated reserve of 1.7 billion tonnes of iron ore, won the status of ‘Preferred bidder' for blocks B, C and D of the mines with an estimated reserve of 1.28 billion tonnes of high-grade magnetite iron ore with 62-64 per cent Fe content). On the domestic front, SAIL signed a deed of transfer with Burn Standard and Co. Ltd. (BSCL) for transfer of Burn Standard's refractory unit at Salem to its newly-formed subsidiary SAIL Refractory Company Limited (SRCL).

Since SAIL's requirement of refractory material was expected to increase substantially after implementation of its modernisation and expansion plans, the merger held immense strategic advantage for the company in the long run, the statement said.

Reviewing the third quarter performance, SAIL Chairman C. S. Verma said: “The uptrend over the preceding quarter performance is an indication of the overall steel scenario becoming positive and internal measures yielding the desired results. With prices of coke stabilising, steel demand strengthening and increased production volumes in the offing for SAIL, the year 2012 is likely to be a year of fresh beginnings.”

Keywords: SAIL profit

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