Living up to its position as one of the jewels of Indian industry, Steel Authority of India Ltd (SAIL) has once again made its stakeholders proud by achieving a record breaking financial performance in 2004-05. Surpassing all estimates, the company booked a whopping PAT of Rs. 6,817 crore on a turnover of Rs. 31,800 crore during the year, recording an improvement of 32% over that of the previous year.
- Turnover soars 32% to all-time high of Rs. 31,800 crore
- Record Q4 net profit of Rs. 2,678 crore
- Total debt reduced by Rs. 2,920 crore; Rs. 296 crore lower interest outgo
- Company virtually debt free
- 33% dividend including 15% interim already paid
- Best-ever production, sales, techno-economic parameters
SAIL’s outstanding financial performance during the year has brought it the status of being amongst the topmost profitable companies in the country from being among the largest loss makers just a couple of years ago. The achievement during the year was crowned by best-ever quarterly performance in Q4 of 2004-05, when all the seven steel plants of SAIL, including the three special steels plants, showed net profit.
The SAIL Board of Directors, which took on record the company’s audited financial results for FY ’05 here today, have recommended final dividend of 18% on paid up equity amounting to Rs. 743 crore for the company’s shareholders; of this, the Government will receive about Rs. 638 crore as the major shareholder in the company. The company earlier paid interim dividend of 15% of the paid-up capital for the year 2004-05.
During 2004-05, while SAIL’s saleable steel production grew from 2.31 million tonnes (MT) in Q1 to 2.7 MT in Q2, then to 2.94 MT in Q3 and finally to 3.1 MT in Q4, its profit before tax became progressively larger – from Rs. 1,205 crore in April-June ’04 to Rs. 1,823 crore in July-September ’04, Rs. 2,711 crore in October-December ’04 and Rs. 3,626 crore in January-March ’05. The continuous consolidation of the company’s financial fundamentals was the outcome of a well-orchestrated strategy in a buoyant steel market. The measures included increase in production and sales volumes, improvement in product-mix by optimising output of value-added products and increasing the proportion of special steel, higher utilisation of the continuous casting process, improvement in techno-economics and prudent financial management.
During the year, maintaining its average capacity utilisation at 104%, SAIL achieved a record production of 11 MT of saleable steel. The proportion of finished steel in total production during 2004-05 went up to 84% from a level of 80% achieved during 2003-04 with the proportion of semis being reduced. Impressive growth was achieved in some of the value-added product categories: 15% in production of plates, 5% in bars & rounds, 7% in rails and 34% in wheels & axles. Highest-ever production of 7.5 MT through the continuous casting (CC) route resulted in best-ever CC ratio of 64% in total crude steel as against 61% in 2003-04.
Besides higher labour productivity of 144 tonnes per man per year (4% growth), the company achieved best-ever overall energy consumption of 7.29 giga calories per tonne of crude steel with a reduction of 2% over the previous year. SAIL achieved its lowest coke rate ever at 536 kg per tonne of hot metal with a reduction of 1% over 2003-04. Introduction of alternative fuels like coal dust and tar in a number of blast furnaces of SAIL contributed to the overall cost management effort during a year when cost of inputs, particularly coking coal, increased substantially.
Prices remained generally stable during the year. Average sales realisation also remained almost consistent on a quarter-to-quarter basis during the year. Increase in demand for steel throughout the year gave SAIL the opportunity to register all-time high sales of steel at 10.7 MT. The company’s domestic sales grew 8% over the previous year to reach a level of 10.3 MT. SAIL consciously contained exports of steel at 4.6 lakh tonnes as against the 11 lakh tonnes shipped during 2003-04 in order to make more steel available in the country.
The company’s thrust on enhancing revenue from value-added products paid rich dividends. Production of special steels from the integrated steel plants rose to a level of 1.9 MT during 2004-05, recording a growth of 25% over the previous year. The company supplied 7.3 lakh tonnes of rails to the Indian Railways, 5% higher than the volume in 2003-04. SAIL’s supply to the Railways also included long rails measuring up to 65 metres in length.
Better revenue generation during the year enabled SAIL to reduce borrowings to the level of its deposits in various banks, implying virtually zero-debt status for the company. At the end of FY ’05, SAIL’s market borrowings, which reduced by Rs. 2,900 crore from the previous year, stood at Rs. 5,770 crore, whereas its short-term deposits also touched a similar magnitude. SAIL did not acquire any fresh loan in the last two years and financed VR for more than 1,400 employees during 2004-05 from internal accruals. Interest outgo for the company was lower by Rs. 296 crore during the just-concluded financial year. The Institute of Cost & Works Accountant of India (ICWAI) recognised SAIL’s cost management efforts for the second year consecutively.
SAIL has an ambitious plan of increasing hot metal production by its integrated steel plants to around 20 MT by 2011-12. During this period the company will increase its crude steel production by approx. 7 MT, and the proportion of semis in the overall saleable mix will reduce to 4% from the current level of 16%. With an overall investment target amounting to around Rs. 25,000 crore, the company has already initiated measures to attain the milestones in a graded manner.
Capital schemes valued at over Rs. 3,000 crore are under various stages of implementation, and schemes of similar amount are likely to be taken up for evaluation and approval in the current year as well. Some of the important projects under implementation include reconstruction of coke oven batteries at Bhilai, Bokaro and Rourkela Steel Plants, modernisation and technological upgradation of BF # 4 of RSP and BF # 7 of BSP, installation of bloom caster and associated facilities at Durgapur Steel Plant, etc. The company has decided to implement ERP (Enterprise Resource Planning) across the organisation in a phased manner.
Mr. V.S. Jain, Chairman, SAIL, gave credit for the brilliant performance of the company to the teamwork and dedicated efforts of the employees. "Proactive actions taken by the company in the past have paid rich dividends. Emerging as one of the top profit-making companies of the country, SAIL is now set to perform on full throttle and blaze a new trail in the future," he said.