Steel Authority of India Ltd posted a 40 percent rise in quarterly profit, helped by lower input costs, but said it was concerned about rising prices of raw materials.Steel sales have been rising at near double-digit rates in India, driven by demand from the infrastructure and automotive segments, pushing prices higher.In April, the World Steel Association said global steel demand was growing faster and sooner than expected, driven primarily by China.Higher steel prices in the first two months of the current quarter to June augured well for the state-run firm's financials, Chairman S.K. Roongta said at a news conference after the results, but rising costs could hit profit."Prices have improved. In April and May prices were much better than what they were in the previous quarters (but) also there is pressure on costs," he said.SAIL, with annual capacity of about 15 million tonnes, is the largest producer in India but lags Tata Steel's capacity of 30 million tonnes, mostly from its Corus unit in Europe.A recent global trend of locking in coal prices for the shorter term, instead of a 40-year-old system of annual price deals, also has a bearing for SAIL, Roongta said.SAIL has finalised its coal contract for April-June at $200 per tonne, compared with $128 last year, and will have to renegotiate it for the July-September quarter.Steelmakers have struggled to manage costs after global miners in April scrapped the system of fixed annual pricing for iron ore and coal, in favour of quarterly contracts.SAIL is self-sufficient in iron ore, the other key raw material for steel, but imports most of its coal.NET PROFIT RISESSAIL said net profit rose to 20.85 billion rupees ($967 million) for its fiscal fourth-quarter ended March, compared with 14.85 billion a year ago. Net sales rose to 122.3 billion rupees from 119.86 billion.A Reuters poll of 12 analysts had estimated net profit of 20.8 billion rupees on sales of 116.8 billion rupees.It said higher sale of value-added products and lower input costs helped boost profit during the quarter.SAIL plans to spend 120 billion rupees during the current fiscal year to March 2011 to expand capacity, and may borrow about 60 billion rupees to part-fund expansion.The company is in talks with South Korea's POSCO to set up a 1.5 million tonne steel plant near SAIL's existing facility at Bokaro.Media reports have indicated that POSCO will take a 51 percent stake in the JV, and will transfer advanced technology to the venture.Roongta said discussions were ongoing, but there was no deadline, adding that the company had also begun "very preliminary" talks with Tata Steel and Arcelor Mittal for similar joint ventures.Shares in SAIL, which has a market value of $17.4 billion, closed 3.5 percent higher at 205.55 rupees on a firm Mumbai bourse. The stock has lost nearly 15 percent so far in 2010, underperforming a 3.5 percent fall in the main index.(Additional reporting by Prashant Mehra; editing by Surojit Gupta, editing by Will Waterman)News posted by www.newsinfoline.com
Click here to read more news from www.newsinfoline.com
Please follow our blogs
newsinfolinephotogallery
prabugallery
newsinfolinephotogallery1
photogallery1
No comments:
Post a Comment