Higher input costs decreased SAIL’s margin for Q3

Submitted by Rajvir Khanna on Wed, 01/28/2009 – 13:00. Company Results PSU Sector Steel Sector Featured TNM

Higher input costs and global slowdown adversely hit the business of state operated Steel Authority of India (SAIL) for the third quarter of current financial year.

The steel giant registered 56.4% decline in net profit for the quarter ended December 31, 2008 leading to a setback for its expansion plans amid recessionary waves across the world.

The sales of PSU major declined 5.9% to 8,852.3 crore during the quarter following low demand from reality and automobile sector. High input costs and lower sales realizations hit its business leading to decline in overall net profit. It spent Rs 5,880.5 crore for raw material in the third quarter as compared to Rs 3,250.8 crore in the same period last year.

The company said in a statement, “The bottomline was impacted primarily due to a sharp rise in input prices, especially imported and domestic coking coal, ferro-alloys etc. The adverse impact on account of higher prices of coking coal alone amounted to approximately Rs 2,641 crore.”

However, the company saved around Rs 275 crore during the quarter on accounts of its efficient management, cost cutting measures and reduction in coke rate by over 2 per cent and energy consumption by 4 per cent.

Meanwhile, SAIL has decided to declare an interim dividend of Rs 1.30 per share at the rate of 13% on shares of Rs 10 face value with immediate effect.

Source: http://www.topnews.in/higher-input-costs-decreased-sails-margin-q3-2116691

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New high in recycling waste

Tata Steel’s 1 million tonnes capacity Waste Recycling Plant created a new high in 2002-03 by achieving 15 months production in 12 months, and recovering metallics worth Rs 74.51 crores, including steel grade scrap of Rs 48.69 crores. The recovery rate at the Plant is 92.2%.

During last year, the Waste Recycling Plant despatched 3.748 lakh tonnes of metallics as compared to 2.878 lakh tonnes in 2001-02. Several initiatives taken by the plant yielded handsome results. These included merger of activities from Steel Melting Shop-1 through to the Waste Recycling Plant; commissioning of an additional balling crane and modernisation of its obsolete track crane; segregation of big scrap pieces from slag pit to balling pit and more efficient utilisation of the cranes; enhancement of magnetic capacity in the balling cranes to segregate scrap more effectively and quickly; an on-line production reporting system; and a modified binder screen to improve screen visibility.

Set up in 1986, and relocated in 1998 to accommodate the company’s Cold Rolling Mill, the Waste Recycling Plant receives slag from LD# I, LD# II and the Blast Furnaces and recovers iron from it, such that near zero iron is allowed to go out of the Steel Works as waste. The WRP is an important player in the company’s effort to conserve natural resources and optimise their use in the manufacturing process.

Slag from LD# I, LD# II and the Blast Furnace comes to the WRP where it is processed separately to recover iron of the required chemistry to suit the customer’s requirement. Slag with high amounts of iron -big jam -received at the pit is segregate it as per size and quality before being processed.

WRP has also been working at reducing the processing cost per tonne of metallics recovered. From Rs 566 per tonne of metallics recovered in 1998 -99, it has brought costs down to Rs 437 per tonne in 2002 -03. This is because of higher recovery and lower diesel and lubricant consumption. The percentage yield of metallics in two years has gone up from 24.7% in 2000 -01 to 32.2% in 2002 -03.

Wealth from Waste is what the WRP believes in and it has several improvement initiatives including Quality Improvement Projects, TOP , SAP, LAN, AQUIP and CIP in place to improve its I performance further.

Source:http://www.tatasteel.com/webzine/tatasteel_news/tisconewsarchive/aspire/page3.htm

Signs Steel May Have Bottomed

Related:AK Steel Holding Corp., BHP Billiton Ltd., Arcelor Mittal
A Wall Street Journal article published today (1/7/09) talks about recent efforts of steel producers around the world to open up select mills, in a sign that the market for steel may have bottomed.

From their mid-2008 highs, steel and iron ore prices have slipped 40% as a weakening global economy and financial crisis has slowed demand for cars, houses and other durable goods. However, there are many factors that suggest that this commodity, so heavily correlated to economic activity, may have bottomed and may gain steam in 2009.

Since the decline in global steel prices, producers have been quick to cut production. Several global steel/iron ore producers such as ArcelorMittal (NYSE: MT – News), AK Steel Holdings (NYSE: AKS – News), BHP Billiton (NYSE: BHP – News) and Baosteel Group have cut 2009 production by 25-30%, hoping to stem further price deterioration.

Producers have been opening mills back up selectively, and although this suggests the start to a revitalizing market, in the near term it is probably a function of lower supplies rather than a pickup in demand.

In the 2nd half of ’09 (2H09), prices for iron ore and steel will likely see upward momentum for two reasons. First, stimulus packages, particularly in China, will start working their way into the economy. This will promote economic activity and increase demand for steel/iron ore as the need for cars, infrastructure and housing picks up. Secondly, massive global liquidity injections into the financial sector in late 2008 should start to thaw credit markets in 2009. This will encourage investment, expansion and economic activity in both OECD [Organization for Economic Co-operation and Development] and emerging markets.

Coal will also be a benefactor of the pickup in demand in 2H09. Metallurgical coal is a vital part of the steel-making process and the increase in demand should push prices higher in the face of continuing supply constraints on a global scale. Being a swing supplier, U.S. eastern coal basins (Appalachia) should see prices head higher due to demand from Atlantic and Asian markets.

Source: http://news.indiamart.com/news-link.html?url=http%3A%2F%2Fus%2Erd%2Eyahoo%2Ecom%2Ffinance%2Findustry%2Fnews%2Fmostpop%2F%2Ahttp%3A%2F%2Fbiz%2Eyahoo%2Ecom%2Fzacks%2F090107%2F16693%2Ehtml%3F%2Ev%3D1

Steel Minister pulled up SAIL for delay in projects

The government criticized the Steel Authority of India Ltd. for slow growth in its expansion plans. It has decided to review its work on regular basis for timely completion of ongoing and new projects. SAIL has to increase its steel production capacity to 26 million tons by the financial year 2010.

Union Steel Minister Ram Vilas Paswan reviewed the progress of various expansion projects of SAIL worth Rs 54,000 crore. He added, “I am not satisfied with the pace of SAIL’s brown-field expansions and have asked the steel secretary to ensure that the PSU completes the envisaged projects in a time bound manner.”

He expressed concerns over the delay in execution of expansion plans and directed the concerned top brass of Steel Ministry to expedite procurement of equipment from global suppliers. He reminded the role of SAIL in increasing steel production capacity of the country to 124 million tons, by the end of 2012.

Meanwhile, SAIL’s officials assured the minister that the execution of expansion projects would soon speed up as at present suppliers have no fresh orders due to the global slow down.

Source: http://www.topnews.in/steel-minister-pulled-sail-delay-projects-2101275

Tata Steel’s Jamshedpur plant expansion ‘almost complete’

Kolkata (IANS): The capacity expansion work of Tata Steel’s Jamshedpur plant in Jharkhand from five million tonnes per annum (mtpa) to seven mtpa is ‘almost complete’, a top official of the Tata group said here Monday.

The capacity expansion work was scheduled to get over by 2008.

“The work for further capacity expansion from seven mtpa to 10 mtpa is going full strength,” Tata Sons director J.J. Irani said at a seminar organised here by the Indian Chamber of Commerce.

Tata Sons is the holding company of Tata Group that owns Tata Steel.

Talking about the global economic meltdown, Irani said it would not impact much on India. “I don’t see the crisis hitting India the way it has hit the western countries.”

“Indians don’t waste electricity, food and clothes like Americans and save a lot, which has insulated them from high financial risk at this time.”

The present economic cycle is bound to turn in a year or two’s time, he added.

Source: http://www.hindu.com/thehindu/holnus/006200901052021.htm