The Hindu Business Line : Durgapur Steel to see profit again, after 28 years

WHEN it happened the last time during the National Emergency in 1976, no one probably realised that it would not occur again in nearly three decades. One is talking about the Durgapur Steel Plant notching up a net profit, which is once more being expected in 2003-04, that is, after 28 long years.

Having happened such a long time ago, there was no one around to explain how the plant had made a net profit in 1976. However, a number of reasons are being cited for the expected performance in the current financial year.

The plant is expecting to register a net profit in the last quarter of 2002-2003, but no one is willing to disclose the figures unless and until Steel Authority of India Ltd (SAIL) finalises its annual results by May 30.

Sources said that the net profit would be "nominal'' and it would not be enough to wipe out the total losses for the whole year. Thus, the last fiscal would continue to be a net loss year for DSP. However, the company registered cash profits in 2000-01 and 2001-02 to the tune of Rs 58 crore and Rs 32 crore, respectively.

The DSP officials said that the most important reason for the change in fortune was the recent firming up of steel prices. This was mentioned by Dr S.K. Bhattacharya, Managing Director of DSP, too.

"With the market remaining firm and production on an improving trend, we are planning for a net profit in the current year on an annual basis'', Dr Bhattacharya noted.

The annual turnover of DSP also went up by some notches in 2002-03. It is expected to be around Rs 2,100-2,200 crore. In the previous fiscal it was around Rs 1,800-1,900 crore.

Throwing some light on DSP's increasing productivity, the sources told Business Line, "Earlier our units used to record 85-90 per cent capacity utilisation. Last year it went up to 105 per cent and in 2003-04 it will be around 110 per cent''.

In 2002-03, DSP's saleable steel production was 15.84 lakh tonne against 15.27 lakh tonne in 2001-02 marking a growth of 3.8 per cent. Crude steel production grew by 2.4 per cent to 17.07 lakh tonne from 16.67 lakh tonne.

"Hot metal production, with the commissioning of the blast furnace No. 3 during the year, touched a new high of 19.4 lakh tonne. It bettered the previous best of 18.43 lakh tonne in 2001-02 marking a growth of 5.3 per cent'', they said.

The company is also taking drastic steps to reduce its production cost. DSP is suffering from huge interest and depreciation burden, currently at Rs 450 crore, which is mostly due to the modernisation programme of the Nineties.

The sources said the ongoing debt-restructuring programme worked out by SAIL would reduce DSP's overall burden on this account to approximately Rs 420 crore.

In 2002-03, DSP exported steel worth Rs 140 crore to Nepal, Sri Lanka, Malaysia, Thailand and the Philippines. The volume of exported steel was 1.2 lakh tonne.

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