A rebound in the prices of steel notwithstanding, state-run steelmaker Steel Authority of India (SAIL) might remain in the red in 2017-18, a parliamentary standing committee has observed. The committee’s estimates are, however, not backed by any detailed working. SAIL has now reported losses for seven quarters in a row. “SAIL is likely to post a net loss of Rs 4,211 crore during 2017-18,” the panel observed.
The company is targeting revenue of Rs 64,155 crore this fiscal. A plunge in the prices of steel has seen SAIL reporting a lower top line the last three years: from Rs 53,470 crore in 2014-15 to Rs 43,934 crore in 2015-16 and Rs 31,330 crore in the first nine months of 2016-17. To add to the steelmaker’s woes, the Indian market was flooded with cheap imports from China, Japan and Korea before the government stepped in to impose a minimum import price in February 2016. Later, some products attracted an anti-dumping duty.
Analysts estimate that approximately 20 million tonnes of incremental capacity will be added during FY17-19 with flats accounting for roughly 67%. “With exports as an exit route — at realisations that are not meaningfully lower than domestic’s — oversupply in flats is not a concern,” Credit Suisse analysts wrote recently.
India’s steel industry produces roughly equal long (52%) and flat (48%) products. While the former is not very well traded and hence, dependent on domestic demand, the latter is seeing a double benefit from import substitution and rising exports. Some private-sector players such as JSW Steel have bounced back into the black.
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SAIL, meanwhile, had to halve the bonus for its 70,000-odd non-executive employees in 2015-16. Chairman P K Singh informed the committee that the firm’s financial performance has improved in the nine months to December, with net sales rising 14.9% to Rs 31,330 crore and the earnings before interest, taxes, depreciation and amortisation (Ebitda) improving by Rs 2,115 crore to Rs 529 crore.
The net loss for the period stood at Rs 2,062 crore. Both production and sales of saleable steel increased 16% during the period at 10.2 mt and 9.7 mt respectively, over the corresponding period previous fiscal.