Steel Authority of India Ltd (SAIL) may be in for a profit surge if the company’s plea to Indian Railways for a provisional hike in prices for the supplies of rails is approved.
India’s largest public sector steel maker has been booking a provisional price of Rs 67,500 a tonne for rails supplied to the railways in the last fiscal year (2022-23) as well as in the first six months of the current fiscal year (April to September).
The company is going to seek an ad hoc increase in prices for 2022-23 before it sends the cost data for final price calculation.
The price finalised for FY22 was Rs 85,300 a tonne.
“We will be approaching the railways to give us an ad hoc increase until we submit the cost data of 2022-23 to the CA Cost Office and it is finalised. So, we will be requesting for an ad hoc increase for 2022-23 as well as 2023-24 since our costs are much more,” Anil Tulsiani, director finance of SAIL, informed analysts.
The company booked a Rs 1,750-crore benefit from the long-awaited price revision of the FY22 order from the railways in the quarter ending September 30.
Pointed out by an analyst that steel prices have come off sharply in this fiscal after touching a record high in 2021-22, the finance director said chances of getting a lower price than Rs 85,300 a tonne are slim.
“We will not be able to comment on 2023-24. But regarding 2022-23, it is basically — the entire thing is based on our costs, which is being intimated to the CA Cost Office who verifies that.”
“So, we don’t see that there will be any reduction from that since — in the financial year 2022-23, the cost of coal has also gone up substantially as compared to 2021-22,” Tulsiani replied.
SAIL has met the entire demand for steel tracks of the railways for decades. It supplied 11.70 lakh tonnes of tracks in 2022-23. It is also the largest producer of loco wheels.
SAIL has installed capacity of 20 million tonnes per annum..
The company posted a consolidated net profit of Rs 1,305.59 crore for the second quarter of the current fiscal (July to September) as higher sales volumes led to increased income.
It had incurred Rs 329.36 crore net loss during the July-September period a year ago.
Total income rose to Rs 29,858.19 crore from Rs 26,642.02 crore in the year-ago quarter.
