The unaudited financial results of Steel Authority of India Limited (SAIL), taken on record by its Board of Directors here today, showed 7% y-o-y growth in the companyÔÇÖs turnover of Rs. 47,042 crore. SAILÔÇÖs turnover for January-March (Q4) of FY ÔÇÖ11 at Rs. 13,137 crore was also 7% higher than the previous quarter and 1% higher than the corresponding period last year (CPLY).
The companyÔÇÖs profitability during Q4 improved over the previous quarter due to better sales realisations despite market fluctuations and demand uncertainties. Profit before tax (PBT) at Rs. 2,188 crore was 34% higher than that in Q3, while profit after tax (PAT) at Rs. 1,507 crore showed improvement of 36% over the previous quarter. However, the sharp rise in prices of inputs, especially coal, during the year resulted in adverse impact on y-o-y comparison of Q4 PBT and PAT, which fell by 29% and 28% respectively over CPLY.
On a yearly basis, rise in input costs impacted SAILÔÇÖs financial performance in FY ÔÇÖ11 by around Rs. 3,718 crore, of which Rs. 3,100 crore was on account of increase in price of imported coking coal alone. Hike in indigenous coal prices was to the tune of Rs. 350 crore. Further, the company had to bear additional cost of Rs. 2,200 crore on account of higher salaries & wages during 2010-11. These factors, and weakening market demand for flat products, were mainly responsible for SAILÔÇÖs FY ÔÇÖ11 PBT falling 29% y-o-y to Rs. 7,157 crore and 28% lower PAT at Rs. 4,881 crore.
The SAIL Board did not recommend any final dividend payment to company shareholders today since the process of Government audit of the companyÔÇÖs accounts is still underway. Announcement on dividend will be made after accounts are finalised.
SAIL Chairman Mr C.S. Verma addressing a press conference at Ispat Bhavan, New Delhi
During Q4, the SAIL plants produced 3.43 million tonnes (MT) of saleable steel, a growth of 5% over CPLY, with capacity utilisation of 126%. This contributed significantly to the companyÔÇÖs production of 12.89 MT of saleable steel during FY ÔÇÖ11, a growth of 2% over the previous year, with capacity utilisation at 116%. Maintaining its thrust on production of value-added and special steels, SAIL achieved highest-ever Q4 production of value-added products at 1.26 MT, a growth of 6% over CPLY, as well as best-ever annual production of these high-value items at 4.8 MT, showing a growth of 3% over FY ÔÇÖ10. Growth was recorded in production of items such as electrode quality wire rods (37%), high tensile plates (29%), TMT-HCR wire rods & rounds (34%), LPG HR coils/sheets (12%), SAILCOR HR/CR products (69%), 90-UTS rails (2%), etc.
Under SAILÔÇÖs modernisation & expansion plan, capital expenditure at Rs. 3,278 crore in Q4 was 13% higher than CPLY. During FY ÔÇÖ11, the companyÔÇÖs capex touched a record Rs. 11,280 crore, 6% higher than the previous year. All major facilities under the expansion plan of Salem Steel Plant were completed on schedule in Sept. ÔÇÖ10 and are under stabilisation for regular production. Also, Blast Furnace # 2 at Bokaro Steel Plant has been upgraded and commissioned in July ÔÇÖ10. At IISCO Steel Plant in Burnpur, some of the major new facilities like Sinter Plant, Pig casting machine, Main Receiving Station and Oxygen Plant are ready for commissioning. Included among the schemes related to improvement in quality, upgradation of existing facilities, replacement, etc., that have been completed during the year are: upgradation of Plate Mill at Bhilai Steel Plant, installation of 700 tpd Oxygen Plant and simultaneous blowing of converters in SMS-II at Rourkela, and rebuilding of Coke Oven Battery # 10 at Burnpur.
To meet capex requirements for maintaining the schedule for modernisation & expansion, SAIL increased its market borrowings by around Rs. 3,650 crore during FY ÔÇÖ11. On 31.3.11, the companyÔÇÖs total borrowings stood at Rs. 20,162 crore, taking its debt-equity ratio to 0.54:1. The companyÔÇÖs cash reserves in term deposits stood at over Rs. 17,000 crore as on 31.3.11. SAILÔÇÖs net worth on 31.3.11 was Rs. 37,622 crore as against Rs. 33,317 crore a year ago.
SAILÔÇÖs thrust on optimisation of human resource resulted in overall reduction in employee strength by about 6,000, primarily on account of natural separation, even after fresh intake of about 1,750. As a result, labour productivity in SAIL plants in FY ÔÇÖ11 went up to 241 tonnes per manyear, the highest since inception, from the previous best of 226 tonnes per manyear achieved in FY ÔÇÖ10.
FY ÔÇÖ11 was a landmark year for SAIL in terms of obtaining security of raw material supplies. Grant of forestry clearance by the Ministry of Environment & Forests (MoEF) for Ajitaburu, Budhaburu and Sukri-Latur leases of Chiria iron ore mines in Jharkhand in Mar. ÔÇÖ11 provided the ground for assurance of around 40% of the iron ore requirement of SAIL over the next 50 years being met. The company has already initiated actions for development of state-of-the-art mechanised mines in Chiria, initially with a capacity of 7 Mtpa. For this, SAIL has appointed a consultant of global repute ÔÇô M/s Hatch Associates of Australia ÔÇô for preparation of a detailed project report (DPR) that will provide the best beneficiation technologies available in the world today for efficient use of iron ore. The estimated cost for development of the Chiria mines is about Rs. 5,000 crore.
SAIL also obtained clearance from the MoEF for enhancing the mining capacity of integrated Barsua-Taldih-Kalta iron ore mines from the present level of 3.8 Mtpa to 8.05 Mtpa (along with beneficiation and pelletisation facilities) in Oct. ÔÇÖ10 and for development of Sitanala coking coal block in Dec. ÔÇÖ10. Efforts are on to develop 0.3 Mtpa underground mine at Sitanala. In Sep. ÔÇÖ10, the Chhattisgarh government accorded approval for renewal of Baraduar lease, which has reserves of about 75 MT of low-silica dolomite.
A number of new strategic initiatives and alliances also made FY ÔÇÖ11 significant for SAIL. The major developments include the following:
Project-related activities have commenced at SAIL Growth Works in Kulti for setting up a railway wagon manufacturing unit in joint venture with RITES. The unit under the newly incorporated company, SAIL-RITES Bengal Wagon Industry Pvt. Ltd., will have the capacity to manufacture 1,200 wagons and rehabilitate 300 wagons per annum. The plant is expected to be commissioned by Mar. ÔÇÖ12.
In view of the locational proximity of its Jagdishpur Steel Unit to the national gas grid, SAIL is working with Kobe Steel of Japan to install a steel plant of 1.5 MT per annum capacity based on gas-based DRI technology and using Electric Arc Furnace for steel making with value added products at Jagdishpur. The feasibility of setting up a 1,000-MW gas-based power plant is also being examined.
SAIL and Burn Standard Company Ltd (BSCL) signed an MOU for setting up a factory which will manufacture cast steel bogies, couplers and other related products. The unit will come up on around 128 acres of leasehold land under the possession of BSCL at Jellingham, West Bengal. The Indian Railways have assured average offtake of 5,000 bogies and equal number of couplers per annum for a period of 10 years.
Process of amalgamation and merger of SAILÔÇÖs subsidiary Maharashtra Elecktosmelt Limited with the parent company is in its final stages. Order of merger is expected shortly.
Continuing with its tradition of previous years, SAIL employees won 15 of a total of 28 Vishwakarma Rashtriya Puraskars for the year 2008, presented in Sep. ÔÇÖ10. Of the 179 awardees who received the Prime MinisterÔÇÖs Shram Awards for the years 2005, 2006 and 2007 also in Sep. ÔÇÖ10, 56 were from SAIL. Carrying forward their baton of excellence, SAIL employees also drew wide recognition in the Shram Awards announced for the year 2008 announced in Aug. ÔÇÖ10, with 24 out of 52 awards going their way. SAILÔÇÖs established fundamental strengths also received recognition from premier national-level organisations. These included the maiden Wockhardt Shining Star CSR Award in the Iron & Steel Sector category and twin PSU Excellence Awards presented by the Indian Chamber of Commerce for ÔÇÿBest HR ManagementÔÇÖ andfor ÔÇÿR&D, Technology Development & InnovationÔÇÖ.
Reflecting on the achievements of the company during FY ÔÇÖ11, SAIL Chairman Mr. C.S. Verma said: ÔÇ£The significant uptrend in quarter-on-quarter performance is ample testimony to the success of our strategic initiatives in the area of people and processes. People focus has led to highest-ever labour productivity with a happy workforce committed to work wonders. Our organic growth plans are moving in the right direction at desired pace, and with steel demand likely to grow significantly, it is only a matter of time that we would start reaping full benefits of the new facilities. To realise SAILÔÇÖs vision of becoming a global player, we are working on multiple fronts at the international level by adopting the inorganic route and strategic tie-ups, aimed at backward, forward and lateral integration. In the coming months, our stakeholders and well-wishers will witness the emergence of a new SAIL ÔÇô a global SAIL.ÔÇØ
