Come SAIL Away: A New Course For India’s Largest State-Run Steel Company

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Sometimes life is all about taking risks. But calculated gambles need to be based on more than just mere intuition or gut feelings, they need to have a basis in history and past performance. Who better to know that than India’s state-run steel maker, Steel Authority of India (SAIL)?

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A couple of years ago, MetalMiner reported on how this public sector company had decided to embark on an approx. US $9 billion expansion program when the very word “expansion” was being laughed at by other competitors because of the poor conditions in the domestic and international markets.

Going by what some of the steel sector analysts are now saying, coupled with the performance of company itself, early signs show that SAIL head honchos perhaps were right in charting a new route. For starters, SAIL registered a growth rate of 11 percent in sales at 1.06 million tons (MT) in May this year.

A statement by the company said it had registered sales at 0.96 MT in the same month last year. SAIL has attributed this to a rise in exports to the tune of 76 percent on a year-on-year basis during the month, adding that production at SAIL plants kept pace with hot metal production of 1.26 MT achieved in May, registering a year-over-year growth of 4 percent.

SAIL had registered a marginal 1.35 percent increase in net profit in the January-March quarter and a 20.6 percent growth in net profit in FY14. The company produced 12.9 MT of steel in FY14, an increase of 4 percent over the previous financial year. Coming at a time when uptake, domestically and internationally, was down, this performance was commended by all in the steel sector.

Going by what some steel sector analysts are now saying, coupled with the performance of company itself, early signs show that SAIL’s head honchos might have been right to chart a new course. For starters, SAIL registered a growth rate of 11 percent in sales at 1.06 million tons (MT) in May of this year. A statement by the company said it had registered sales at 0.96 MT in the same month last year.

SAIL has attributed this to a rise in exports to the tune of 76 percent on a year-on-year basis during the month, adding that production at SAIL plants kept pace with hot metal production of 1.26 MT achieved in May, registering a year-over-year growth of 4 percent.

SAIL registered a marginal 1.35 percent increase in net profit in the January-March quarter and a 20.6 percent growth in net profit in FY14. The company produced 12.9 MT of steel in FY14, an increase of 4 percent over the previous financial year.

Coming at a time when uptake, domestically and internationally, was down, SAIL’s performance was commended by all in the steel sector.

Part of that US $9 billion was slated to be used on the expansion of SAIL’s hot metal production capacity to 23 MT a year by 2014-15 from the present 14 MT. India’s largest public sector steel giant has now acknowledged that it has already put in place plans to market additional volumes of steel when it will be rolled out of its newly integrated steel plants later this year.  NEXT: SAIL’s Growth Strategy Takes Wind

The author, Sohrab Darabshaw, contributes an Indian perspective on industrial metals markets to MetalMiner.

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