New Delhi, November 17
PSU steel major SAIL is expecting some benefits of lower coking coal price to accrue in its Q3 numbers (October- December), but overall realisations may not change much over Q2, Ánil Kumar Tulsiani, the company’s Director (Finance) said.
Long products could see prices firming up a bit, he said adding that price of steel – which peaked in April – has now seen a 25–30 per cent decline in the domestic market. Flat products are witnessing a much “greater adverse impact”.
Interestingly, the second half of the fiscal are seen as seasonally busy quarters for the steel industry.
Q3 outlook
“The realisations may not be better as compared to the second quarter. We may try to keep it at the same levels in the third quarter,” Tulsiani said during a recent analyst call.
SAIL’s volume sales stood at 7.36 million tonne (mt) in the first half of FY23, lower than the 7.61 mt in the same period last year. Revenue rose 6 per cent y-o-y to ₹50,275 crore; while EBITDA dropped 73 per cent to ₹3,780 crore.
Average sales price stood at around ₹62,000 per tonne, down one per cent y-o-y and lower by 18 per cent quarter-on-quarter (q-o-q) .
The SAIL management expects FY23 production to be in the range of 17 – 17.5 mt and sales to be around 16 – 16.5 mt. Benefits of lower coking coal procured in August– September will accrue in Q3FY23.
Coking coal costs
A benefit of ₹5,000 per tonne is expected on coal import cost during the current quarter.
However, after an initial decline, coal prices are again on the rise and this could bring about an impact in Q4.
“Impact of coal prices moving up, will come in the fourth quarter (January –March). When we import from the USA, it is round about 3 months and it works out round about 2 to 3 months for the Australian coal. So, we will be getting the benefit of the imports which we have made in the month of say, August and September. May be whatever coal we are procuring now, it will be shifted over to the fourth quarter,” he said.
Maintain debt
SAIL is expecting to maintain debt at ₹25,000 crore levels for FY23. Net debt increased by ₹9,000 crore Q1 and ₹5,000 crore in Q2 and stood at ₹27,400 crore at the end of H1FY23.
“But in the third quarter, we expect not much of an increase in the debt levels. And in the fourth quarter, we will try to reduce that to some extent. It may not reach the levels which we had at March 2022,” Tulsiani said.
Working capital build up has been mainly due to coking coal payments, he added.