SAIL's profits for the quarter and year-ended March 2011 were dented by the rising coking coal prices. This was despite a marginal increase in revenue for the period.

SAIL reported a 28 per cent drop in net profits for March quarter at Rs 1,507.12 crore as against Rs 2,084 crore in corresponding last quarter. Turnover was up by a per cent to Rs 13,136.52 crore (Rs 13,005.88 crore).

For the year-ended March 2011, SAIL's net profit was down 28 per cent at Rs 4,881.25 crore (Rs 6754.37 crore). Turnover for the year was up 7 per cent at Rs 47,041.56 (Rs 43,934.70 crore).

Rising input costs

“The rise in input costs especially coking coal had an adverse impact profits to an extent of Rs 3,015 crore during the year,” Mr C.S. Verma, Chairman, SAIL, said.

The average coking price almost doubled from $128 a tonne in 2009-10 to $212 per tonne during the year. SAIL imports more than two third of its coking coal requirements. The domestic coal prices also shot up to Rs 7500 per tonne as against Rs 6400 crore in the previous year.

Further, the company had to bear the additional cost of Rs 2,200 crore on account of higher salaries and wages during the year.

The SAIL board did not recommend any final dividend as the Government audit of company's accounts was still under way. The SAIL scrip shed one per cent to close at Rs 160 at the BSE on Friday ahead of the company's results.

Capex

SAIL plans to spend Rs 14,337 crore towards capital expenditure in 2011-12 as against Rs 11,280 crore spent during the year. Part of the capex about Rs 3,500-Rs 4,000 crore will be met from the proceeds of the proposed follow-on public offer (FPO), Mr Verma said.

The FPO might happen during the last week of May or early June, Mr Verma said. The Government, which owns 85.82 per cent expects to dilute 5 per cent stake in the company, while a fresh equity of 5 per cent would be issued by the company.

The company expects to commission two large blast furnaces – one each at Burnpur and Rourkela plants during the year, which would enhance the hot metal capacity by 5.5 million tonnes per annum (mtpa) to 19.5 mtpa by the year-end.

Further, SAIL expects to finalise 50:50 joint venture with Kobe Steel to produce iron ore nuggets in about two months time, Mr Verma said. The company also expects to soon finalise the detailed project report for its joint venture with South Korean steel maker Posco.

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