Declining steel prices and major shutdowns for upgradation impact SAIL Q2, FY’16

Release Date: 
Fri, 11/06/2015 - 17:46

New Delhi, 06.11.2015:In H1 2015-16, SAIL registered a growth in hot metal and crude steel production of 8% and 5% respectively over CPLY. However, SAIL has incurred net loss of Rs 1378 Cr in H1, FY16 which includes a net loss of Rs 1056 Cr during the 2nd quarter.

SAIL’s financial performance has suffered mainly due to lower sales realisation which dropped by 24% in Q2, FY16 over same quarter last year (corresponding to around Rs.7500 per tonne) and a decline in sales by 6.7%. Although the sales in the long product segment registered a robust growth of 20% over CPLY, the sales of flat products declined by around 15% primarily due to the 75 days shutdown of the Hot Strip Mill at Bokaro for its upgradation.

SAIL incurred an additional expenditure of Rs. 280 Crore towards contribution to District Mineral Fund (DMF) under MMDR Amendment Act – 2015. There has also been an increase in interest & depreciation related charges with commissioning of the new facilities under the on-going modernisation and expansion plan.

The Company’s performance is set to improve in H2, FY16 with completion of the upgradation of the Hot Strip Mill at Bokaro. This upgradation which includes installation of a new reversing roughing mill and heat shields would not only, increase the capacity of the Hot Strip Mill from 3.9 mtpa to 4.2 mpta but would also improve the quality of the product. Further, with the completion of capital repairs of one blast furnace during the quarter and ramping up of production gradually from the new units there would be substantial increase in production of saleable steel.

Indian domestic prices have registered steep decline due to impact of lower priced steel imports especially from China, Japan, Korea and CIS countries. Domestic and International Steel Market continues to pose challenges to the Indian steel makers. Government of India’s support in the form of imposition of safeguard duty has given some relief to the industry. However, the industry will have to bear with low cost imports for some more time and may look for some more support. Speaking on the occasion, Secretary, MSME and Chairman SAIL, Dr. A.K. Pujari said, “SAIL is focused to ramp up production from the modernized facilities along with renewed thrust on production of value added steel and cost reduction which will bolster its performance during the balance period of the current fiscal.”

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