While the financial results of Tata Steel were spectacular by the current standards in a world, where a company making a decent profit has become a rarity, most other steel companies in the country are either satisfied with smaller margins or have made substantial losses.

Today many steel majors in the world are fighting for survival. It is no different in India. What did not go quite well for the state-owned steel behemoth was that the global steel prices crashed once again after a short revival just when the company required cash the most. A 10 per cent increase in the realised price on the same volume of sales would have given the company as much as Rs 800 crore extra. This is a figure on the thumb rule taken merely to explain the impact of higher prices on a company like Sail.A little more than that perhaps could wipe all the losses out and bring the company to black. In contrast, the volatile world market has taken away 30 per cent to 45 per cent of the flat products prices in the course of only six months. Although the Indian market remained reasonably insulated from global disturbance due to protective tariffs and floor prices, the company got lower export prices in the global downturn.

The global steel market will certainly not turn worse from what it is now. The US market is getting slightly more stable as the domestic players are trying a price hike on HR coils. Although this is more a result of the trade suits against eleven odd countries including India, the worst situation in the country with large domestic production accompanied by a flood of imports leading to huge stocks is over.

Unfortunately, SAIL or other Indian companies may not be able to take advantage of this on account of the trade cases. They may however continue exports till a preliminary determination is announced if the prices are favourable.

The Indian steel majors including Sail will have to turn homeward as global opportunities are on the downhill. The domestic market does not seem to be weak despite some slowdown reported in the last month and a half. There seems to be some construction activities boosting up steel demand in the country.

Although the pressure will be increasingly felt with the domestic market getting more and more congested as a result of the dropped exports, the situation is unlikely to be worse than what was experienced in the quarter that has just passed by. But for Sail, the balance sheets will continue to be under stress despite the gains from the reported cost cuts and loan write offs. The burden of depreciation and interest on account of the past investment projects will continue to weigh heavily on the balance sheets of the company for some more time to come.

But, on the positive side, the company will start gaining from some of the investments made recently in the form of both cost reduction and quality improvement, provided that there is market large enough for the new facilities to be fully used. For Sail, it is a problem both of prices and cost. But, at whatever level of efficiency the company operates, the costs are sticky downward and it needs more and more effort to bring those down. The company has reported huge cost reduction already. How much more will be possible is difficult to say. The point is while costs will be stuck at some level, the volatile prices will ultimately decide on the company's fortunes.

Sail today has stiff competition to face in the domestic market from new producers as well as from competitive imports. Liberalisation has brought in Essar, Ispat, Jindal and a larger Tisco. It has also bought many others with smaller and medium size facilities as potential threats to the company. The major ones produce flat steel products - those that gave Sail most of its money in the past. Today, a stagnant domestic market has seen a glut of flat products. Despite a reasonably high import duty, low global prices continue to make steel cheap on the Indian shores.

Whatever advantage Sail has in moving its raw materials from very close to its plants gets neutralised when the finished products have to be hauled to the growing steel markets located far away in the western and southern parts of the country. Poor port and railway facilities make its imports of coal and exports of iron and steel dear. The benefits of low production costs get also wiped out in negotiating poor infrastructure. Sail like many other steel companies in the world is struggling with a bloated labour force - partly rendered redundant by the technological and managerial revolution.

Then many useful hands and the company's money go to maintain towns, schools, hospitals at a scale only a few steel producers in the world perhaps do. These peripheral and non-business activities should have been the responsibility of the state governments. Tisco, another such company doing so, perhaps was literally right when they said that they `also make steel'!

Probably Sail would have continued to carry on with the burden on their back with a smile and have proudly displayed their peripheral work to brighten their corporate image as a responsible and socially sensitive steel maker. But, today, such an involvement is a luxury for the company for sure. So much different the world is now for this steel giant that every rupee should value much more than it is.

(The author is associated with Steel Exporters' Forum. Views expressed here are his own and not of the forum)