New Delhi, May 25: The Steel Authority of India Ltd’s (SAIL) bottomline has been hit by falling steel prices and rising input costs during 2005-06. It has posted a 41 per cent drop in net profit at Rs 4,013 crore compared with Rs 6,817 crore in the previous year.
“Steel prices started falling from last April and hit a low in December. Input costs, especially coal prices, went up. All this impacted the bottomline,” said chairman V.S. Jain.
Turnover rose marginally from Rs 32,569 crore in 2004-05 to Rs 33,220 crore last year.
Despite lower profit, the board has recommended a final dividend of 7.5 per cent. Along with an interim dividend of 12.5 per cent announced earlier, the total payout for 2005-06 stood at 20 per cent.
In 2005-06, steel prices declined 22 per cent, while raw material costs escalated by over 18 per cent.
The country’s largest steel-maker was worst hit in the fourth quarter with net profit plummeting to Rs 1,103 crore from Rs 2,678 crore in the same period of fiscal 2005.
Jain, however, plans to expand output by a million tonne this year as he expects higher demand for the metal. “This year looks very good and the years ahead too should be good for steel.”
Although the company experienced a profit crunch last year, SAIL achieved record sales of 11.3 million tonnes. Its four main integrated steel plants operated at 109 per cent average capacity.
Officials said the state-run company has managed to cut debt by Rs 1,472 crore, bringing it down to Rs 4,298 crore. Interest burden also came down by Rs 137 crore.
Jain said there is no plan to take any fresh debt and the expansion and modernisation of SAIL plants would be funded through internal resources. Sources said the lower debt figure could help SAIL raise fresh debt, if it so desired, from global markets at a later date.
Officials said capital schemes valued at over Rs 4,400 crore are under various stages of implementation.
“Some of the important projects under implementation include setting up a bloom caster at Durgapur Steel Plant, slab caster at Bhilai, modification of MaeWest block system at Bokaro, and rebuilding of three coke oven batteries each at Bhilai, Bokaro and Rourkela steel plants,” they added.