Advertisement

  • News
  • Columns
  • Interviews
  • BW Communities
  • Events
  • BW TV
  • Subscribe to Print
  • Editorial Calendar 19-20
BW Businessworld

SAIL Upbeat On Demand After Q4 Profit Beat

Photo Credit :

Steel Authority of India Ltd (SAIL), the country's largest domestic steel producer, is optimistic about demand prospects after beating market estimates with a 3 per cent rise in quarterly profit.

The state-run steelmaker posted a 12 per cent jump in quarterly sales, mainly helped by higher prices in India's fast growing steel market.

But high raw material costs and losses due to foreign exchange fluctuations whittled down the gains.

"India is a demand centre ... the outlook is fairly positive," SAIL Chairman C.S. Verma told reporters on Tuesday.

Global crude steel output grew at a slower pace in 2011, and demand this year has been squeezed by the euro zone debt crisis and tight credit conditions in China, the world's biggest steel consumer and producer.

Steel demand in India has also suffered over the past year as growth in Asia's third-largest economy slows because of the RBI's inflation-fighting campaign and government gridlock, but still remains in the 5 to 7 per cent growth range.

SAIL said its net profit in January-March, its fiscal fourth quarter, rose to 15.77 billion rupees from 15.31 billion rupees a year earlier.

Net sales rose to 133.97 billion rupees from 119.43 billion a year earlier.

Analysts had estimated on average a net profit of 10.9 billion rupees for the quarter on net sales of 127.8 billion.

The company, which imports 75 per cent of its coking coal requirement, said higher coking coal prices pushed up costs by 40 billion rupees over the entire fiscal year.

A depreciating rupee, which fell 12.3 per cent in the 2011/12 fiscal year, added another 9 billion rupees in costs.

SAIL did not separately disclose the impact for the quarter.

Earlier this month, Tata Steel, the world's No.7 steelmaker, posted worse-than-expected quarterly numbers, while JSW Steel said an interim ban on iron ore mining in Karnataka cut profits by 10 per cent.

SAIL, with annual capacity of about 14 million tonnes, is the largest steel producer in India, but lags Tata Steel's global capacity of about 28 million tonnes.

The steelmaker is in the process of raising capacity to 19 million tonnes by March 2014, and plans to spend 145 billion rupees on expansion projects during the current fiscal year.

Shares in the company, valued at nearly $7 billion, have risen 14 per cent so far in 2012, outperforming a 6.4 per cent increase in the main stock index.

On Tuesday, the stock closed down 0.4 per cent at 93.10 rupees in a flat Mumbai market.

(Reuters)