Steel Authority of India (SAIL) net sales fell by 17% to Rs 9,944 crore in the second quarter of 2009-10. Despite higher volume of sales (up14%) to 3 million tonnes, net realisation has declined sharply—by more than 31%. SAIL has been entirely dependent on domestic sales and its value-added products, which provided further cushion to realisation.
Lower realisation, escalation in input prices, rail freight and imposition of ad valorem royalty on minerals pushed operating margins down by 21% to Rs2,388 crore and net profit declined by 17% to Rs1,663 crore. SAIL is going for major expansion through the blast furnace route to create additional capacity of 12 million tonnes to reach 27 million tonnes.