Steel Authority of India's Q3 profit drops as imports dent sales, prices

Steel Authority of India (SAIL) reports lower Q3 profit due to higher imports, resulting in drop in sales and prices.

Steel Authority of India (SAIL) reported a lower third-quarter profit on February 12, as higher imports led to a drop in both volume sales and prices. The company's consolidated net profit fell 22% year-on-year to 4.23 billion rupees ($51 million) in the three months to Dec. 31.

India's steel imports rose to a five-year high during April-December, turning the country into a net importer of finished steel, amid a spurt in economic activity and a revamp of infrastructure by the government in a pre-election year. However, that created a dearth of opportunity for domestic companies and, according to analysts, led to SAIL's sales volume taking a hit. The imports-fuelled supply boom also led to lower prices.

That resulted in SAIL's revenue from operations dropping nearly 7% to 233.49 billion rupees in the quarter. Revenue from its Bhilai steel plant, which contributes to about a third of total revenue, fell 12%.

Tata Steel's revenue also fell in the quarter but was mitigated by a drop in costs. SAIL's total expenses also fell, with the nearly 7% decline led by a 4% decrease in raw material costs as it switched to using cheaper Russian coking coal as Australian prices jumped 50%. ($1 = 82.9780 Indian rupees)