Steel Authority of India Limited (SAIL) continued to post profit during the third quarter of the current financial year in spite of much higher cost of inputs and lower sales volumes due to depressed market conditions. However, as against growth in profit achieved during the first two quarters of current FY, SAIL's Q3 net profit at Rs. 843 crore showed a 56 % decline than the corresponding quarter last year (YoY).
The unaudited financial results for Q3 of FY '09, taken on record by the company's Board of Directors here today, revealed that the steel major has achieved Q3 profit before tax (PBT) at Rs. 1,257 crore, lower by 57% than CPLY, although, SAIL's Q3 turnover at Rs. 9,946 crore was lower by 7.5% (YoY). With this, the first nine months of FY '09 recorded highest turnover at Rs. 35,674 crore - growth of 18.8% over CPLY. The company also achieved PAT of Rs. 4,688 crore in this period, 9.1% lower than CPLY.
The company's bottomline was impacted primarily due to sharp rise in input prices especially imported and domestic coking coal, ferro-alloys etc. The adverse impact on account of higher prices of coking coal alone amounted to approx. Rs. 2641 crore. Besides, due to downturn in the market in Q3, decline in sales volume at 2.4 million tonnes also impacted the profitability. As compared to first half of the year, impact on profitability was due to twin factors of higher input costs & lower sales realizations.
The impact of high cost of inputs and market recession over previous quarter could be partially offset through a series of measures and interventions, which included reduction in usage of imported coking coal in blend by 6%, cost of coking coal consumption by improving coal dust injection by 14% and using tar as alternate fuel. Major savings could be effected on account of improvement in techno-economic parameters viz. reduction in coke rate by over 2 % and energy consumption by 4 % during the year and several other cost efficiency measures, resulting in savings of about Rs. 275 crores during the quarter. Efforts were also made to maintain the manpower costs which were rising in previous quarters.
In Q3, SAIL aligned production in line with market demand and inspite of lower production at 3.02 million tonnes of saleable steel, capacity utilization stood at 110 %. Higher share of value added steel and better product mix helped by over Rs. 400 crs. in cushioning the adverse impact on account of lower price realizations during the quarter.
The Board of Directors have approved payment of an interim pidend at the rate of 13 % (Rs. 1.3 per share) amounting to Rs. 537 crore, of which Government of India' share would work out at Rs. 461 crore. In addition, pidend tax of about Rs. 90 crores would also be paid to the Government.