SAIL slips into red, posts Q2 loss at Rs 1,056 crore

New Delhi: Steel giant SAIL on Friday reported a standalone net loss of Rs 1,055.96 crore for the second quarter ended September 30, due to lower sales realisation.

The country's largest steel maker had reported a profit of Rs 649.49 crore in the year-ago period, the company said in a regulatory filing.

Total income declined by 20.7 percent to Rs 9,387.55 crore during the quarter under review as against Rs 11,840.64 crore in the same quarter last fiscal, it said.

"SAIL's financial performance has suffered mainly due to lower sales realisation which dropped by 24 percent in the second quarter of FY16, over same quarter last year (corresponding to around Rs 7,500 per tonne) and a decline in sales by 6.7 percent," the company said in a statement.

Although the sales in the long product segment registered a robust growth of 20 percent over corresponding period last year, the sales of flat products declined by around 15 percent primarily due to 75 days shutdown of the hot strip mill at Bokaro for its upgradation, the statement said.

SAIL incurred an additional expenditure of Rs 280 crore towards contribution to District Mineral Fund (DMF) under MMDR Amendment Act, 2015. There has also been an increase in interest and depreciation related charges with commissioning of the new facilities under the on-going modernisation and expansion plan, it added.

The company's performance is set to improve in the second half with completion of the upgradation of the Hot Strip Mill at Bokaro.

"This upgradation which includes installation of a new reversing roughing mill and heat shields would not only increase the capacity of the Hot Strip Mill from 3.9 mtpa (million tonnes per annum) to 4.2 mpta but would also improve the quality of the product," it said.

Further, with the completion of capital repairs of one blast furnace during the quarter and ramping up of production, gradually, from the new units there would be substantial increase in production of saleable steel, it added.

SAIL further said that Indian domestic prices have registered steep decline due to impact of lower priced steel imports especially from China, Japan, Korea and CIS countries.

Domestic and international market continues to pose challenge to the Indian steel makers. The government's support in the form of imposition of safeguard duty has given some relief to the industry, it said.

However, the industry will have to bear with low cost imports for some more time and may look for some more support.

"In H1 2015-16, SAIL registered a growth in hot metal and crude steel production of 8 percent and 5 percent, respectively, over CPLY," the statement said.

"However, SAIL has incurred a net loss of Rs 1,378 crore in H1, FY16 which includes a net loss of Rs 1,056 crore during the second quarter," it added.