India’s largest steel producer Steel Authority of India Ltd (SAIL) on Thursday reported a 54.6% year-on-year decline in net profit at Rs 495 crore for the quarter ended September against Rs 1,090 crore last year, as high input costs and a strong dollar hit profit. A stronger dollar resulted in a notional loss of Rs 509 crore during the quarter.
The company, however, remained bullish on increased demand and stable steel prices looking forward, despite a gloomy global scenario.
“There is definitely going to be a rise in demand in the second half (of this fiscal year),” said CS Verma, chairman, SAIL. “Steel prices have globally come down. They have been relatively stable in India...I don't foresee a further dip in steel prices.”
Total income also rose 3% year-on-year at Rs 11,470 crore during the quarter compared to Rs 11,123 crore last year.
The steel maker plans to spend just under Rs 14,700 in the current fiscal year on capacity expansion projects as part of a programme to swell total capacity at its five integrated plants to 21.4 million tonnes by March 2013, the company said.
The impact of higher costs was partially offset by higher sales volumes, and an increase in net sales realisation to Rs 36,230 per tonne during the July-September quarter against Rs 31,320 a year-ago, Verma said.
Elaborating on the steel maker’s joint venture with South Korean major POSCO, Verma said talks with the Korean company were “positive” but refused to give any time-frame for signing the agreement. “We are having a dialogue on a very very positive note.”
The two firms plan to set up a plant to produce 3 million tonne a year of auto-grade steel, but they are yet to agree on the shareholding pattern in the Rs 16,000-crore joint venture.