SAIL posts a 40 per cent jump in net profit

On the back of better demand and sales realisation,Steel Authority of India Ltd SAIL,the country's largest steel producer,on Friday reported a 40 jump in its net profit....

On the back of better demand and sales realisation,Steel Authority of India Ltd SAIL,the country8217;s largest steel producer,on Friday reported a 40 jump in its net profit at Rs 2,085 crore for the quarter ended March 31,2010. During the period,net sales increased marginally to Rs 12,672.69 crore compared with Rs 12,519.33 crore in the corresponding period of the previous fiscal.

Better steel prices have mainly contributed to the profit. The fourth quarter of 2008-09 was the worst period in terms of prices, Ernst amp; Young partner and national leader metals and mining practice Navin Vohra said.

For the full fiscal,SAILs net profit jumped 9.46 at Rs 6754.37 crore,while total income declined to Rs 43,233.26 crore as against Rs 45,623.41 crore on lower net sales realisation. The companys board has declared a dividend of Rs 1.70 per share,in addition to an already-paid interim dividend of Rs 1.60 a share,for the previous financial year.

SAIL chairman SK Roongta said that higher margin and lower input cost resulted in a sharp increase in profit during the quarter. Higher value-added steel production also helped post better profit in the last quarter. The last quarter net realisation was 10 higher over the same quarter year-on-year, Roongta said.

SAIL plans to invest Rs 12,500 crore in ramping up its capacity in the current fiscal. It is in discussion with at least two private steel firms Tata Steel and Posco to set up joint ventures for production. Discussion with Posco is going on a serious note, Roongta,who demits office this month-end,said. The company plans to borrow about Rs 6,000 crore from the market to expand its capacity across various plants across the country. Its total borrowing during the fiscal ending 2010 stood at Rs 16,511 crore,taking its debt-equity ratio to 0.49:1. We aim to borrow Rs 6,000 crore this year so that we do not exhaust our cash reserves at this point of time, Roongta said.

The domestic steel consumption is expected to grow as the government pushes for speedy construction of infrastructure. The highways and building construction have gathered momentum following the sluggish demand because of the crisis in the global financial sector.

Raw material prices have gone up,but demand is good. The current fiscal should be good for steelmakers, a Delhi-based industry watcher said.

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The contract renewal of steel makers with mining companies for iron ore is expected to come up during the July-September period. FE