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BL Research Bureau

In spite of considerable cost pressures and a decision to hold the price line, SAIL has achieved a sales growth of 37 per cent and profit growth of 20 per cent for the quarter ended June 2008. A better product mix due to focus on value-added/special steel products, higher capacity utilisation and a host of initiatives to control costs through operational efficiencies, helped performance.

SAIL registered a June quarter sales of Rs 12,183 crore, an increase of 37 per cent on a year-on-year basis. Overall sales volumes increased by over two-fold, driven by expansion in the distribution network. SAIL’s profit before tax increased 21 per cent and net profit by 20 per cent. There has been an 18 per cent increase in EBIDTA, with the EBIDTA margin at 26 per cent.

The facilities’ average capacity utilisation moved beyond 100 per cent, with production through the energy efficient continuous casting method, crossing 2 million tonnes.

The company also made headway in the usage of energy and fuel, while containing coke costs. A discernible improvement in the product mix is evident from the fact that the production of value-added products increased by 41 per cent (the highest ever for any quarter), while the production of saleable steel has been lower at 2.9 million tonnes (3 mt in Q1 FY 08).

SAIL held the price line and made available 9 per cent more steel in the domestic market during this quarter, as compared with last year. Specific products such as TMT bars, HR coils (16 per cent) and galvanised sheet/corrugated sheets (30 per cent) showed high growth. In what could be a positive development in a high interest cost environment, SAIL’s debt-equity ratio declined to 0.11:1 at the end of June, compared with 0.18:1 during Q1 2008.

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