Steel Authority of India (SAIL) Q4 98/99 earnings summary

Executive summary

• FY98/99 sales turnover was Rs.14,993.85 crore; net loss after tax was Rs.1,573.66 crore, versus net profit of Rs.132.99 crore in FY97/98.

• Sluggish steel demand, import competition, lower sales realisation, higher interest and depreciation, and the VISL merger weighed on results; cost-control and revenue measures generated reported savings of Rs.902 crore.

Financial highlights

• Sales were Rs.14,993.85 crore versus Rs.14,665.25 crore; PBDIT was Rs.1,503 crore versus Rs.2,498 crore.

• Interest and finance charges rose to Rs.2,017.44 crore from Rs.1,553.76 crore; depreciation rose to Rs.1,104.06 crore from Rs.794.86 crore.

• Loss before tax was Rs.1,618.33 crore; after a Rs.44.67 crore income-tax refund, net loss was Rs.1,573.66 crore. No dividend was recommended.

• Capital expenditure on fixed assets and capital work-in-progress was Rs.1,174 crore, primarily financed through external borrowings.

Outlook and guidance

• A four-part turnaround plan targets financial and asset restructuring, operational improvements, and organisational improvements; a restructuring proposal based on IDBI recommendations was submitted to the Government for consideration.

• Modernisation benefits are expected to materialise in phases; RSP reheating furnace No. 5 and BSP sinter plant No. 3 were expected to be completed by March 2000.

• Capital spending was restricted to ongoing schemes and statutory requirements; further actions included VRS, closure of uneconomic units, non-core asset hiving-off, and revenue maximisation.