Sharp decline in steel prices, high operation cost and old and outdated technology are the primary reasons for lower profit of SAIL, Steel Minister Beni Prasad Verma said Thursday.
New Delhi: Sharp decline in steel prices, high operation cost and old and outdated technology are the primary reasons for lower profit of SAIL, Steel Minister Beni Prasad Verma said Thursday.
Profit after tax of Steel Authority of India (SAIL) came down to Rs 2,170 crore in 2012-13 from Rs 3,543 crore a year earlier, Verma said in a written question to Rajya Sabha.
Major reasons for lower profits are a sharp decline in prices of steel products, old and outdated technology and equipment at its ISSCO Steel Plant (ISP), Alloy Steels Plant (ASP) and Visvevaraya Iron and Steel Plant (VISL), he said.
Over-capacity and adverse market conditions, particularly in alloy and stainless steel, increase in prices of major inputs like coal, railway freight, power and fuel, manganese ore and royalty on minerals have also impacted the bottom line.
Besides, high fixed cost of operations of loss-making plants like ISP, ASP, Salem Steel Plant (SSP), VISL and ChandrapurFerro alloy plant (CFP) was also responsible for lower profits, he said.
Sharp depreciation in the value of rupee and impact of capitalisation of modernized facilities at SSP also hit the bottom line of SAIL.
According to the Minister's reply, SSP's loss widened in the last fiscal to Rs 420 crore from Rs 155 crore a year ago. ISP on the other hand minimised loss to Rs 159 crore in 2012-13 compared to Rs 411 crore a year earlier.
ASP registered Rs 120 crore loss and VISL Rs 117 crore loss last fiscal. Profit from SAIL's raw material division also shrunk to Rs 813 crore last fiscal from Rs 1,313 crore a year ago.
SAIL has embarked on a Rs 61,870 crore modernisation and expansion programme to jack up its steel production capacity to 21.4 million tonnes per annum (mtpa) from 12.8 mtpa now.