Steel Authority of India (SAIL) Q4 01/02 earnings summary

Executive summary

• FY 2001-02 turnover fell 4.5% YoY to Rs.15,502 crore; net loss widened to Rs.1,706.89 crore from Rs.728.66 crore, and no dividend was recommended.

• Operating performance faced weak steel prices and demand, while cost-control measures generated ~Rs.450 crore in savings; management expected better FY 2002-03 results as demand and realizations improved.

Financial highlights

• Revenue from sales was Rs.15,502 crore versus Rs.16,232.63 crore; reported net loss was Rs.1,706.89 crore versus Rs.728.66 crore.

• Operating profit (PBDIT) was Rs.1,011 crore; interest and finance charges were Rs.1,562.03 crore and depreciation was Rs.1,155.89 crore.

• Other revenue included Rs.490.58 crore profit on power-plant transfers and Rs.171.64 crore profit on long-term house leases; the CAG review highlighted Rs.622.22 crore of these non-core gains.

• Mild-steel sales volume rose 5.7% YoY to 9.3 million tonnes, despite lower turnover and an ~8% decline in net sales realization.

Outlook and guidance

• FY 2002-03 expected to improve with firmer steel demand and net sales realization, higher production and capacity utilization, and continued cost control.

• Steel-product price increases had been absorbed by the market; production was improving, with a focus on matching output to rising demand and improving techno-economic performance.

• Bhilai rail supply was expected to reach 650,000 tonnes in FY 2002-03, up from 584,000 tonnes in FY 2001-02, following railway expansion plans.