Essar Steel skips dividend

MUMBAI, May 21: The directors of Essar Steel have skipped the dividend for the year ended March 1998. It had paid 10 per cent dividend last ...

MUMBAI, May 21: The directors of Essar Steel have skipped the dividend for the year ended March 1998. It had paid 10 per cent dividend last year. The company, however, posted a turnover of Rs 2,528 crore for the year compared to Rs 1,845 crore last year, a growth of 37 per cent, making aggressive inroads into the domestic and international steel markets.

The operating profit increased by 34 per cent to Rs 759 crore against Rs 565 crore. After providing for depreciation/amortisation of Rs 325 crore Rs 268 crore and interest of Rs 407 crore Rs 286 crore, the company has earned a net profit after tax of Rs 24.70 crore against Rs 9.62 crore last year.

Essar Steel director Prashant Ruia justified the decision not to incur a dividend liability as it would lead to erosion of networth. quot;The 10 per cent dividend payout last year was partly out of general reserves, but this time a decision has been taken to prepay high-cost loans and strengthen the company8217;s financial over the next three years. Handsomedividends will very soon follow,quot; he said.

Announcing the working results to newsmen here today, J Mehra, managing director, has said that the company has succeeded in maintaining its operating margins at 30 per cent through higher net realisation due to value added product mix and lower costs due to captive inputs predominantly power. This was achieved despite recession in the domestic economy, dumping of steel products by CIS countries and the economic debacle in South-east Asia.

Ruia said that Essar sold 1.5 tonnes of HRC against 1.3 million tonnes in the previous year. For the third year in succession, the company retained its premier position of largest exporter of HR products by exporting about 24 per cent of its production 3.6 lakh tonnes to all major markets in Europe, America and the Middle East.

The company successfully shifted its export tonnage away from Asean region, countering the impact of the currency crisis by exporting about 57 per cent to Europe and America in the current yearcompared to about 32 per cent last year.

He said, as on today, the company has outstanding total debts of Rs 4,873 crore which includes long-term advances of Rs 1,000 crore from banks and financial institutions. Essar Steel had raised 335 million at a very competitive average cost of seven per cent per annum. Within two years of commencement of commercial operations, the company repaid/prepaid about Rs 500 crore to domestic institutions and banks and Rs 70 crore to foreign lenders.