The Hindu Business Line : Improvement in product mix, special grade steel lift SAIL

New Delhi, Jan. 29 Steel Authority of India Ltd (SAIL) has reported a 31.5 per cent increase in net profit for the third quarter ended December 2007 to Rs 1,934.66 crore as compared to Rs 1,471.19 crore in the corresponding previous quarter.

Net sales increased 11.66 per cent to Rs 9,533.3 crore (Rs 8,537.07 crore). The sales turnover grew by 11.37 per cent to Rs 10,755.68 crore (Rs 9,657.23 crore).

“The increase in the profitability was mainly due to improvement in the product mix, substantial increase in production of special grade steel and value-added items and higher net sales realisation,” Mr S.K. Roongta, Chairman, SAIL, said at a press conference here on Tuesday.

He added that the increase in profit was also because of efforts taken by the company towards cost reduction.

Interim dividend

The company has also announced an interim divided of 19 per cent, which amounts to Rs 784.78 crore.

SAIL’s net profit for the first nine months of the current financial year registered a 20 per cent increase to Rs 5,160.02 crore (Rs 4,300.41 crore). The net sales increased 11.01 per cent to Rs 26,736.26 crore (Rs 24,082.96 crore).

“SAIL during the first nine months achieved 11.3 million tonnes (mt) of hot metal, 10.4 mt of crude steel and 9.6 mt of saleable steel. Around 3.7 lakh tonnes of additional finished steel were also produced during the period from the existing mills by maximising the capacity utilisation, reducing production of semis and, thereby, improving the share of finished steel to 84 per cent from 81 per cent,” Mr Roongta said.

Capacity utilisation

He also announced that the company’s plants operated at an average capacity utilisation of 121 per cent during the third quarter of the current fiscal as against 112 per cent in the corresponding period last year.

The company, during the December quarter, produced a record 3.4 mt of saleable steel and for the first time in a quarter, production of special steels and value-added items crossed the one million tonne mark, recording a growth of 30 per cent.

“The borrowings of the company were further reduced by Rs 412 crore in third quarter to Rs. 2,792 crore as on 31 December 2007 and with this the debt-equity ratio came down to 0.13:1 at the end of the third quarter,” the Chairman said.

The shares of the company were down 0.21 per cent on the Bombay Stock Exchange to close at Rs 216.2 on Tuesday.

Mr Roongta said that the capital expenditure for the quarter stood at Rs 453 crore. "We expect the expenditure to increase in the fourth quarter," he said, without giving the quantum of investment.

The SAIL Chairman also said that the steel prices were expected to increase by up to Rs 2,500 a tonne during the current quarter. "There is enormous cost pressure, as prices of coking coal and iron ore are rising. Steelmakers will have to avoid a serious contraction of margins and we expect the prices to rise by around Rs 1,500 per tonne in the next two months," he added.

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