Steel Authority of India (SAIL) Q4 96/97 earnings summary

Executive summary

• FY97 performance weakened despite higher production: turnover fell to Rs.14,131.22 crore from Rs.14,710.21 crore, while PBT dropped to Rs.588.03 crore from Rs.1,318.61 crore.

• Sluggish steel demand, import competition, lower selling-price realisations and sharp input and financing cost increases squeezed margins.

• Production efficiencies improved, and modernization continued; capacity and profitability gains were expected as new facilities stabilised.

Financial highlights

• Sales were Rs.14,131.22 crore vs Rs.14,710.21 crore YoY; PBT was Rs.588.03 crore vs Rs.1,318.61 crore.

• Net profit after Rs.75.86 crore MAT provision and Rs.3 crore prior-year tax provision write-back was Rs.515.17 crore vs Rs.1,318.61 crore.

• Interest and finance charges rose to Rs.1,179.48 crore from Rs.808.37 crore; depreciation increased to Rs.690.70 crore from Rs.584.81 crore.

• Proposed dividend was 2.5% of paid-up equity capital, or Rs.103.26 crore, with Rs.10.33 crore dividend tax provision.

• Capital expenditure on fixed assets and capital work-in-progress was Rs.2,397 crore, financed by market borrowings and internal accruals.

Outlook and guidance

• The 1997-98 to 2001-02 investment plan prioritised technology upgrades at existing plants, higher finished-steel output, value-added products and greater use of the energy-efficient continuous-casting route.

• Completion and stabilisation of modernization at Durgapur, Rourkela and Bokaro were expected to improve techno-economic performance, product quality and saleable-steel capacity.

• Rowghat mine development was contingent on a multi-party railway-line MOU; Tasra coking-coal lease transfer was awaited.