Steel Authority of India’s (SAIL) INR 10.56 billion exceptional gain and cheaper coal fuelled net profit in the July-September quarter to more than double at INR 11.80 billion, although realization fell by 6.5% on subdued prices.
SAIL, which clocked INR 5.43 billion net profit during the same quarter of 2012-13 fiscal, largely met its 15-16 MnT coking coal requirements through imports, mostly from the US and Australia.
During the second quarter, the PSU got “exceptional” amount of INR 10.56 billion from global mining major Vale towards damages due to non-supply of full quantity of contracted hard coking coal, leading to a big boost in the bottom-line.
However, this did not truly reflect on the profitability of the company as it had to make a provision, which stands at INR 11.50 billion now, for an impending wage hike of its close to 85,000 non-executives.
“One of the reasons of increase in our profit was lesser prices of coal. The price of the imported coal which was USD 220/MT during the second quarter fiscal has come down to USD 135/MT. So, there was a savings of INR 8.85 billion to the company on this account,” SAIL Chairman C S Verma said.
On the flip side again was the dip in realization to the tune of INR 720 billion during the second quarter ended September 30, compared to the year-ago period.
“Sales realization during the second quarter of the last financial year was INR 37,210/MT. During this quarter, this came down to INR 34,230/MT, thus there is a dip of 6.5% in realization,” Verma said.
Despite the decline in realization, which has a bearing on the prices, SAIL sold 3.015 MnT steel during the quarter, against 2.616 MnT a year ago, clocking a 15% growth.
SAIL’s turnover was also up by 7% to INR 128.02 billion.
SAIL’s total expenditure, at INR110.67 billion, amounted to nearly 96% of the total income during the July-September period. In the second quarter of 2012-13 fiscal, the expenditure (at INR101.14 billion) was 93.51% of total income (INR108.16 billion).
Its finance costs were up over 16% to INR 2.16 billion, while other income declined by over 33% to INR 1.53 billion in the last quarter. The company’s tax outgo also declined by over 13% to INR 2.12 billion in Q2 FY14.
Mr Verma said steel demand will pick up in the coming days, but prices will hover around the same level.
-Sourced
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