SAIL Q2 net profit plunges 55% on higher input costs, weaker rupee

Higher input costs and weak rupee have impacted SAIL's bottom line which got eroded by nearly 55 per cent during the second quarter of the current fiscal at Rs 495 crore over Rs 1,090 crore a year ago.

The company , which sold around three million tonnes of steel during the second quarter, however, hinted that on better demand and stable price, profitability would be strong in the remaining part of the year.

"Due to a sharp increase in input costs, we have taken a hit of Rs 651 crore during the quarter. There was a Rs 509 crore hit due to foreign exchange variation. We have also taken a hit on royalty on iron ore," SAIL Chairman C S Verma said.

Verma said the higher input costs were partially offset by higher net sales realisation during the reporting quarter which stood at Rs 36,320 per tonne over Rs 31,225 a tonne a year ago.

SAIL's plants are mainly fed with captive iron ore, but the company has to import 75 per cent of its need of coking coal, another important raw material for steel manufacturing.

The price of coking coal has been ruling high in the current fiscal due to supply constraint from Australia.

Total sales of the company during July-September quarter of the current fiscal stood at Rs 10,980 crore compared to Rs 10,747 crore in the corresponding quarter last fiscal.

Verma said the plants of the company, which currently has over 14 million tonne per annum capacity, were running at around 110-115 per cent capacity.

The SAIL chief expects sales and production of the company during the second half to be better as traditionally the latter half is considered as the "brisk" one.