Financial Daily from THE HINDU group of publications
Tuesday, Nov 15, 2005
Financial Daily from THE HINDU group of publications Tuesday, Nov 15, 2005 |
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Industry & Economy
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Steel High inputs costs hit domestic steel firms in Q2: Assocham Our Bureau
New Delhi , Nov. 14 THE financials of the domestic steel industry continued to be under pressure in the second quarter of the fiscal, as raw material costs went up by an average of 8.56 per cent in the period, a study has found. The increase in the prices of coking coal and iron ore hit the bottomline of the top 10 steel companies, which saw an average decline of 22.12 per cent in net profit, says the study conducted by the Associated Chambers of Commerce and Industry (Assocham). On the other hand, net sales increased by a mere 1.64 per cent during the period. In fact, China, which was earlier importing steel, has turned into a net exporter. The country produces 290 million tonnes (mt) of steel, while the consumption is 250 mt. Following cheap imports from China and Ukraine, steel prices in India went down during the quarter ended September 2005. The net profit margin of steel companies declined to 13.87 per cent in the second quarter of 2005-06, compared to 18.1 per cent in the year-ago period. Further, raw material costs rose to Rs 6,327 crore (Rs 5,827.72 crore). The largest input cost rise of 45.84 per cent was reported by Electrosteel Castings, followed by Mahindra Ugine Steel Co, which recorded an increase of 28.6 per cent. Other companies, which saw an increase in input prices, were Tata Steel (19.49 per cent), SAIL (15 per cent), Essar Steel (14.29 per cent) and Ispat Industries (3.01 per cent).
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