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High input costs lead to fall in profits of steel majors

Written by: Staff

Kolkata, Feb 26 (UNI) The spiralling costs of inputs, including iron ore, have forced a near-37 per cent decline in the combined net profit of the country's four steel majors in the third quarter this fiscal.

The combined net profit of Steel Authority of India Limited(SAIL), Tata Steel, Essar and JSW Steel during October and December dipped by 36.37 per cent at Rs. 17.88 billion from Rs.

28.27 billion during the corresponding period of the last year.

Their combined sales fell by 3.60 per cent to Rs. 143.67 billion from Rs. 149.04 billion.

''This is largely the fallout of the skyrocketing prices of iron ore, gas and power as well as the fall in the price of finished steel in the domestic market. The situation is likely to continue and there will hardly be any change in the results in the last quarter as well,'' industry sources said.

Though Tata Steel sales increased by 31.78 per cent at Rs. 49.61 billion and that of Essar remained more or less static at Rs. 14.42 billion, the sales of SAIL and JSW Steel experienced sizable fall during the period respectively by 16.49 per cent and 18.29 per cent contributing to an overall decrease.

The reason of Tata Steel making a better sale despite a depressed market was its better product mix, the sources said.

But the company earned 15 per cent less on every ton of steel during the period because of massive steel exports from China, producer of one third of the world' steel, they said.

With Tata Steel remaining less affected among the four, the net profit of SAIL during the quarter took most of the beating having plummeted by 54.7 per cent at Rs. 6.84 billion from Rs. 15.14 billion. While the net profit of JSW Steel fell by nearly 62 per cent at Rs. 1.39 billion coming down from Rs. 2.25 billion, Essar's profit declined by 30 per cent to be at Rs. 1.38 billion.

The increase in the price of iron ore failed to affect the net profit of Tata Steel which has its captive iron ore mines.

While the third quarter results for the Ispat Industries are yet to be announced, the company, having reported a net loss of Rs. 2.33 billion during the second quarter, is not expected to reverse the scene in the third according to industry sources.


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