Higher sales volume, increase in special/value-added steel production, better operational efficiencies and higher interest earnings enabled Steel Authority of India Limited (SAIL) to achieve a profit (after tax) of Rs. 1,835 crore during April-June '08, showing 20.3% growth over the corresponding period last year (CPLY). The improvement in financial performance during the first quarter (Q1) of FY '09, despite a burden of Rs. 1,434 crore on account of substantially higher cost of inputs like coal, freight, ferro-alloys, fuels, etc., and provision for higher wage revision, as well as maintaining a constant price line during May-June of Q1, was mainly due to 10% growth in domestic sales over CPLY at 2.62 million tonnes, including highest-ever Q1 sales of special quality steels. This helped the company register sales turnover of Rs. 12,183 crore, with growth of 37%, during the period. SAIL's unaudited financial results for Q1 of the current financial year were taken on record by the company's Board of Directors here today.
With thrust maintained on production of value-added and special steels, the SAIL plants produced about 1 million tonnes of these items during Q1, showing a growth of 41% over CPLY. The growth includes electrode-quality wire rods (51%), TMT HCRM 500/550-grade wire & rounds (39%), bars & rounds (21%), CRNO (14%), etc. SAIL also produced 5% higher volume of 90-UTS rails (about 2 lakh tonnes) for the Indian Railways during Q1. With utilisation of finishing mills at an all-time high in Q1, finished steel production comprised 88% of production as compared to 84% in CPLY.
Further improvement in operational efficiencies also helped to improve the company's bottomline. With 121% of rated capacity utilisation of continuous casting shops, production through this energy-efficient route crossed 2 million tonnes. This helped in achievement of 5% lower specific energy consumption at 6.89 giga calories per tonne of crude steel produced. Coke rate improved by 2% to 530 kg per tonne of hot metal in Q1 from 539 kg/thm in CPLY. Record converter lining life of 7,584 heats was achieved at Bhilai Steel Plant (BSP) against its earlier best of 6,316 heats.
During Q1, SAIL's debt-equity ratio improved to 0.11:1 as on 30th June '08 from 0.13:1 as on 31st March '08 with reduction in borrowings by Rs. 260.55 crore. With pace of projects under the expansion plan picking up, capital expenditure during the quarter at Rs. 737 crore doubled over CPLY.
During Q1, a number of capital projects were completed, including setting up of Hot Metal Desulphurisation Unit and Coke Oven Gas Holder at Rourkela Steel Plant, 50 MW power facilities for Oxygen Plant at Bokaro Steel Plant, Coal Dust Injection in Blast Furnace-3 and stabilisation of new Bloom Caster at Durgapur Steel Plant, and secondary refining facilities at BSP. Construction activities for expansion at IISCO Steel Plant and Salem Steel Plant have commenced and are progressing as per schedule.
Several strategic initiatives were taken during Q1 for long-term benefit, including signing of memoranda of understanding with Shipping Corporation of India for promoting a joint venture (JV) shipping-related enterprise, with the Kerala government for a JV at Steel Complex Limited at Calicut, decision for installation of Steel Processing Units in different states (already in-principle approval has been accorded for 8 units), etc.
Commenting on the Q1 performance, SAIL Chairman Mr. S.K. Roongta said: "Our strategy of thrust on production of value-added and special quality steels, higher production with still better capacity utilisation and continual improvement in operational efficiencies has helped the company to offset cost pressures and improve profitability, in spite of holding the price line."