New Delhi: Despite steel prices dipping steadily through most of the year and price of coking coal soaring to unprecedented levels, Steel Authority of India Ltd (SAIL) achieved a net profit of Rs. 4,013 crore during 2005-06, the second highest since the company was established 33 years ago. The company also recorded highest-ever saleable steel production of over 12 million tones (MT) and total sales of 11.3 MT during the year. In addition, the company attained new heights in efficiency parameters during the year by adopting new operational initiatives.
The company’s audited financial results for FY ’06, which were taken on record by the SAIL Board of Directors here today, included the financial performance of IISCO Steel Plant (ISP) that was merged with SAIL recently. The SAIL Board has recommended a dividend of 20% on paid-up equity amounting to Rs. 826 crore for the company’s shareholders, including the 12.5% interim dividend paid in February 2006.
During 2005-06, in tune with the target set in its Corporate Plan 2012, SAIL operated all its blast furnaces leading to record production of 14.6 MT of hot metal (11% growth), 13.5 MT of crude steel (8% growth) and over 12 MT of saleable steel (6.6% increase). The four main integrated steel plants of SAIL operated at record-breaking 109% average capacity utilization (saleable steel). The 3 lakh tone operating capacity of ISP is presently being upgraded under a modernization plan. The impressive production performance was supported by the captive mines of SAIL meeting almost 100% requirement of iron ore, with all-time best dispatches of nearly 24 MT in 2005-06.
The company continued with its strategy of utilizing the available potential of existing units and optimizing production of value-added products. Record continuous cast production of 7.9 MT showed a growth of 4% over the previous year. The special steels plants of SAIL also recorded highest-ever saleable steel production of 4.27 lakh tonnes, a growth of 13% over 2004-05.
Besides substantially higher (12% increase) labour productivity of 150 tonnes per man per year, the company achieved lowest-ever coke rate as well as energy and power consumption in 2005-06. In addition to injection of alternate fuels like coal dust and tar in blast furnaces, initiatives such as maximizing sinter usage, improving gas management, optimizing equipment usage and controlling idle operations in the plants enabled SAIL to record best-ever overall energy consumption of 7.24 giga calories per tonne of crude steel with a reduction of 1.2% over the previous year. The company achieved its lowest coke rate ever at 543 kg per tonne of hot metal with a reduction of 1.1% over 2004-05.
Steel prices, which decreased steadily from April to December 2005, dipped to nearly 22% of the previous year’s peak mainly due to decline in global prices. As a result, though SAIL achieved record sales of 11.3 MT during 2005-06, realization was affected. Substantial growth was achieved in making value-added products like plates (6%), wheels & axles (6%), galvanized products (7%), CRNO steel (23%) and wire rods (11%) available in the market. For the first time, SAIL developed and supplied special steel as an import substitute for building naval warships. Rails of 260-metre length were also produced for the first time for the Indian Railways. Exports of SAIL steel increased by over 23% to nearly 5.8 lakh tonnes during 2005-06.
At the end of FY ’06, SAIL’s market borrowings, which reduced by Rs. 1,472 crore from the previous year, stood at Rs. 4,298 crore. With the company’s total short-term deposits in banks exceeding the borrowings, SAIL remained virtually debt-free during the year. Interest outgo for the company was lower by Rs. 137 crore during the just-concluded financial year. Procurement and sales of material through e-platforms by SAIL increased by 40% to Rs. 1,750 crore during the year.
Implementation of phase-I of SAIL’s Corporate Plan continued apace during the year. Capital schemes valued at over Rs. 4,400 crore are currently 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. The company is also implementing Enterprise Resource Planning across the organisation in a phased manner.
Commenting on the results achieved, Mr. V.S. Jain, Chairman, SAIL, said: “The company is surging ahead on the tremendous strengths of its human resources, available infrastructure and financial strength. With the current trends of steel prices improving and price of coking coal reducing, the adverse impact on profitability will be substantially neutralized in the coming months. Envisaging higher production and productivity, SAIL is confident of meeting any competitive challenge from domestic and global players.”