MUMBAI, JAN 30: Steel companies are plunging deeper into the red if the financial performance of these companies in the current year is any indication. Steel Authority of India Ltd (SAIL), the largest steel company in the country, has registered a net loss of Rs 273 crore for the third quarter ended December 1998. This is against a net profit of Rs 30.49 crore in the same period of the last year.Indicating the dismal state of affairs in this vital core sector, the accumulated losses of SAIL during the first nine months of the current fiscal stood at a whopping Rs 890 crore against a profit of Rs 88 crore during the corresponding period last year. Essar Steel, on the other hand, has made a loss of Rs 226.03 crore in the first nine-month period ended December 1998 of the current fiscal. The company has posted a loss of Rs 119.81 cr loss in the third quarter (October-December) of the fiscal.SAIL registered a higher sales turnover of Rs 10,910 crore during April-December as against Rs 10,596 crore last yearposting a marginal increase of three per cent. Essar Steel turnover for the nine-month period was Rs 1,749.74 crore whereas the third quarter turnover amounted to Rs 618.88 crore. According to SAIL, the company had to bear a high burden of interest and depreciation to the tune of Rs 2,230 crore during first nine months of 1998-99 as against Rs 1,649 crore in corresponding period last year showing an increase of Rs 581 crore. Apart from this, the company's statement said that lower net sales realisation was the main reason for company's poor performance.Commenting on the performance, SAIL chairman Arvind Pande stated that notwithstanding the stagnant market, the company's sales have shown a healthy growth. "Our internal efforts at cost reduction and quality improvement will be intensified further. However, the impact on the bottomline is limited and we need a rise in steel demand," he added.SAIL's statement further stated that faced with falling prices for its products, the company resorted to widespreadcost reduction exercise encompassing improved techno-economic parameters, reduction in consumption of coal, better purchase management and optimising consumption of raw material.A statement from Essar Steel said ``1997 had been a tough year with demand stagnation. On the other hand, supply pressures have increased with additional capacities coming into play. The situation has been further exacerbated by imports of steel at dumping prices. The domestic players had to sharply drop prices in order to maintain volumes.''Meanwhile, the net profit of Grasim Industries, the Aditya Birla group flag ship company, dropped by 36.6 per cent to Rs 109.93 crore during the nine-month period ended December 1998 from Rs 173.09 crore in the same period of last year. It has earned a net profit of Rs 16.68 crore in the third quarter.According to management, the drop in profit was due to decrease in "other income" and increase in "depreciation" on account of additional capital expenditure and commissioning of new viscosestaple fibre plant. It had earned a net profit of Rs 230.78 crore during the year ended March 1998. The net turnover declined marginally by 2.6 per cent to Rs 2,556.78 crore from Rs 2,624.88 crore in the previous nine-month period. The operating profit is 8.9 per cent lower at Rs 392.77 crore (Rs 430.98 crore) on account of lower sales volume of viscose staple fibre, cement and sponge iron due to the continued slowdown in the economy.
