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Informist, Wednesday, Feb. 12, 2025

 

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--SAIL: Borrowings INR 339.1 bln as of Dec 31 vs INR 356.0 bln as of Sept 30
--CONTEXT: Comments by SAIL's management in post-earnings investor call
--SAIL: Oct-Dec sales volume 4.3 mln tn vs 3.8 mln tn year ago
--SAIL: See imported coal costs declining further in Jan-Mar
--SAIL: Oct-Dec coal costs came down due to reduction in coal prices
--SAIL: Spent INR 39 bln as capex in Apr-Dec
--SAIL: Net debt currently stands at INR 326 bln
--SAIL: Focusing on improving product mix to raise net sales realisation
--SAIL: Use 85% imported coal, 15% domestic coal for our production
--SAIL: Expect FY25 capex at INR 57 bln

 

By Rajesh Gajra

 

NEW DELHI – The public sector steel major Steel Authority of India Ltd. achieved its sales target of 1.57 million tonnes for January, the management said in a post-earnings call with investors Wednesday. The total steel sales target for 2024-25 (Apr-Mar) is 17.5 million tonnes, the management said. In the first nine months of FY25, SAIL sold 12.5 million tonnes of steel, which means its target for the March quarter is 5 million tonnes.

 

Despite a 13% on year rise in steel sales volume in the December quarter to 4.3 million tonnes, the company's revenue was up only 5% to INR 244.90 billion due to a fall in its net sales realisation amid a sharp fall in steel prices. The management said in the investor call that the company was focusing on improving the product mix to raise the net sales realisation.

 

SAIL's operating profit, or earnings before interest, tax, depreciation, and amortisation, was also up by just 3.0% on year at INR 23.89 billion in Oct-Dec, notwithstanding the benefit the company got from lower coal costs on the back of reduction in imported coal prices. The operating profit was reined in mainly due to a large jump in inventory-related adjustments, wherein the change in inventories of finished goods, work-in-progress, and by-products – an operating expense item — rose substantially to INR 5.94 billion in Oct-Dec from INR (-)25.51 billion in the year ago quarter.

 

The management said there was total inventory of 2.98 million tonnes as of Dec. 31, of which 1.79 million tonnes comprised inventory of finished goods. The finished goods inventory was 1.93 million tonnes as of the end of September quarter, according to the management.

 

The imported coal costs for SAIL in the March quarter are likely to be lower from the December quarter, the management said. The company also expects domestic coal prices to have parity with imported coal prices to the extent of the upper and lower capping in domestic prices. The management said on the whole, the company uses 85% imported coal and 15% domestic coal for steel production.

 

On the capital expenditure front, SAIL's management said its target for FY25 is seen at INR 57 billion, of which INR 39 billion has been spent in the first nine months of the ongoing fiscal. Starting from FY26 and going into much of FY27, the company will likely have a capital expenditure of INR 75 billion, the management said.

 

SAIL's interest costs jumped 11% on year to INR 6.79 billion in the December quarter, and 16% on year to INR 21.28 billion in Apr-Dec. The management said the company aims to close FY25 with a net debt near to the FY24-end level of INR 305.93 billion. As of Dec. 31, the company's net debt was INR 339.07 billion, and the management said that "as of now", the net debt is INR 326 billion.

 

At 1415 IST, shares of SAIL were up 4.7% at INR 104.72 on the National Stock Exchange of India.  End

 

Edited by Tanima Banerjee

 

 

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