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State-owned steel maker SAIL reports a net loss of Rs 322 crore in April-June

New Delhi : State-owned steel maker SAIL reported a net loss of Rs 322 crore in April-June this fiscal on account of lower sales realisation of saleable steel, forex fluctuations and higher capital expenses, Parliament was informed on Wednesday.

Besides, prices of steel products, which are market driven, have plunged due to jump in imports at very low prices, Minister of State for Steel and Mines Vishnu Deo Sai said in a written reply to the Rajya Sabha.

“The major reasons for losses are reduction in net sales realisation of saleable steel, increase in royalty on iron ore, volatility in foreign exchange rates and higher incidence of capital related expenses, that is, interest and depreciation,” he added.

The maharatna public sector undertaking had reported a standalone net loss of Rs 321.64 crore for the first quarter ended June 30, 2015, against a net profit of Rs 530 crore in the year-ago period.

India’s largest steelmaker’s total standalone income fell 16% to Rs 9,502.80 crore in the April-June quarter of this fiscal, from Rs 11,341.20 crore in the same quarter last year.

On steel product prices, the minister said price of HR coils and re-bars imported from China declined 43% and 38%, respectively, in October 2015 compared with October 2014.

Low-priced imports from other countries like Japan and Korea (FTA countries) and Russia are also arriving in India, he added.

“Indian market prices have dropped in line with the prices in international markets, severely affecting profitability of domestic steel companies, including SAIL,” Sai said.

The domestic steel industry has raised the issue of surge in cheaper steel imports from China and other countries at various government forums. SAIL, along with other players, has been pursuing various available trade remedial measures, he informed the House.

Efforts are being made to bring back SAIL on the road to profitability through production optimisation and product-mix improvement, operational efficiency and cost reduction, and rationalisation of manpower, among others, he said.

“However, profitability is mainly related to external factors, particularly steel prices in the market,” he added.

Due to devaluation of the yuan, the Chinese steel exports have become cheaper compared with the domestic steel.

“The domestic producers have had to reduce prices in line with imported products, thereby impacting profitability of domestic steel producers, including SAIL, to a large extent,” the minister said.