PSU steel major SAIL achieved the highest-ever revenue from operations at INR 1,03,473 crore and EBITDA at INR 22,364 crore in the fiscal ended in March 2022 (FY22). It aims to achieve a targeted capex of INR 8,000 crores for FY23, SteelMint learned from company’s investors call held yesterday, 24 May 2022.
Highlights-
- Crude steel production rises 14%, y-o-y: SAIL’s crude steel production rose by 14% to 17.36 mnt in FY22 compared to 15.21 mnt in FY21. Production volumes in Q4FY22 stood at 4.60 mnt, up 2% from 4.53 mnt in the previous quarter.
- Steel sales up by 8%, y-o-y: The PSU major’s steel sales were recorded at 16.15 mnt in FY22, up 8% from 14.94 mnt in the previous fiscal. In Q4, sales rose by 23% to 4.71 mnt against 3.84 mnt in Q3FY22.
- Steel supply to mega-projects: The steel behemoth has supplied steel for the various projects of national importance like Central Vista Delhi, Mumbai-Ahmedabad high speed rail project, Delhi-Meerut RRTS, and Polavaram irrigation project etc.
- Impact of rising coking coal prices: Surging coking coal prices impacted the company’s cost of production by around INR 12,000 crore. Pressure from rising coal costs resulted in the decline in net sales realisations (NSR) for the company’s long and flat steel products.In Q4FY22, the cost of imported coking coal was around INR 28,000-29,000 crore. It is expected that a rise of 10-12% will be seen in the first quarter of FY23.
- Higher NSR for flat steel products: The profitability of Durgapur works was affected due to the lower NSR for long steel products as compared to the flat steel products in Q4FY22. Meanwhile, Rourkela and Bokaro works registered a rise in profits supported by the better NSR for flat steel products and volumes as compared to the previous quarter.For instance, the company’s average realisation for steel stands at around INR 60,000/t in Q4FY22, and that of flat steel products at INR 64,000-65,000/t.
The company’s inventory level stood at around 600,000 t as on 31 March 2022.
SAIL’s take on steel export duty- Less impact is expected because of the recent imposition of steel export duties, considering SAIL has been exporting semi-finished steel as well, which is currently not covered in recent notifications. Exports account for a share of around 8.6%.
Iron ore prices to soften-The company believes that domestic iron ore prices in India are likely to soften post-export duty enhancement which will be beneficial in terms of royalty payments which are in turn driven by IBM prices.
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