SAIL Q3 net may fall to Rs 600 cr
30% decline in rates has put pressure on all domestic steel companies and may severely hit SAIL's performance in Q3.india Updated: Jan 24, 2006 17:08 IST
Though steel prices have stabilised since last month, over 30 per cent decline in rates since April 2004 has put pressure on all domestic steel companies and may severely hit SAIL's performance in the third quarter.
Tata Steel also reported over 15 per cent decline in the net profit for the third quarter ended December 31, 2005.
When contacted, a SAIL spokesperson declined to comment but analysts estimate that its net profit may decline to as low as Rs 600 crore compared to Rs 1,127 crore witness in the second quarter.
Steel prices, between April-December, for flat products have come down by 30 per cent to Rs 25,000 per tonne in December 2005 from about Rs 35,000 a tonne in April last year.
Though the volumes have grown in face of buoyancy in the economy, prices have come down as China is offloading extra capacity in Asian markets at lower prices leading to a lower price benchmark in India.
SAIL Chairman V S Jain remained unperturbed and said: "Prices have been under pressure but now there is stability. We have adjusted prices in line with global prices to remain buoyant about growth in the sector."
Most of SAIL's plants have been operating at over capacity of about 108 per cent and this shows a healthy picture of the corporation.
Even most of the international steel companies, including Korean steel giant Posco has felt the pressure of declining prices in the last nine months, analysts feel.