SAIL posts a Rs 321 crore net loss in Q1

KOLKATA: Steel Authority of India Limited ( SAIL) plunged a net loss of Rs 321.64 crore in Q1 FY16 hit by a 15.3 per cent slide in net sales realisation due to higher power costs and competition from cheap imports. Lower realisations also dragged the company’s turnover down 15.7 per cent to Rs 10,552. 38 crore, despite a production growth of 6 per cent, 11 per cent and 14 per cent in saleable steel, crude steel and hot metal respectively in the first quarter of FY16 (Apr-June 2015). In a statement issued on Friday, the country’s largest state owned steel company said in addition to lower realisations, an increase in royalty on iron ore from September 1, 2014, and higher rates of purchased power also added to the losses.

SAIL disappointing first quarter results came even as domestic steel consumption witnessed a growth of about 7 per cent in Q1 of FY 16 largely due to an unprecedented jump in imports of steel from countries like China, Japan, Korea, Russia, etc. In Q1 of FY16 steel imports went up 54 per cent compared to same period last year and this eroded a large chunk of the market for domestically produced steel. Exports from India was also lower by 31 per cent in Q1 Fy16, which in turn further affected the demand-supply balance. Steel Secretary Rakesh Singh, who is also holding additional charge as chairman SAIL said: “SAIL is following a strategy of raising volumes and lowering costs. The thrust will be on maximizing production of value added products to get the benefit of higher infrastructure spending in the near future.”

The effect of the subdued quarterly performance has been partially offset by improvement in techno-economics such as lower coke rate with an improvement of 4 per cent over CPLY, higher CDI usage with 2 per cent improvement, lower energy consumption with 1 per cent improvement over CPLY, lower store & spare consumption and lower imported coking coal. “Going forward, Government’s support to the domestic steel industry in the form of upward revision in customs duty on import is a step in the right direction and the industry is expected to get some support in ensuring stable price,” the official statement added.