Steel Authority of India Ltd., the nation’s second-biggest producer, reported a worse-than-expected 55 percent drop in second-quarter profit after paying higher coking coal prices and incurring foreign-exchange losses.
Net income fell to 4.95 billion rupees ($100 million), or 1.2 rupees a share, in the three months ended Sept. 30 from 10.9 billion rupees, or 2.64 rupees, a year earlier, the company said today in a statement. The median of 26 analyst estimates compiled by Bloomberg was 8.72 billion rupees. Sales gained 2 percent to 109.8 billion rupees.
Coking coal, a key raw material used to make steel, surged 40 percent during the period, compared with a 14 percent increase in the price of steel hot-rolled coils. Steel Authority imports about 70 percent of the coking-coal it needs.
The company booked a 5.09 billion-rupee foreign-exchange loss, against a gain of 1.53 billion rupees a year earlier, after the rupee depreciated 8.7 percent in the last quarter.
Shares of New Delhi-based Steel Authority fell as much as 4.9 percent to 107.25 rupees and traded at 109.25 rupees as of 2:54 p.m. in Mumbai. The stock has declined 40 percent this year, compared with a 15 percent drop in the key Sensitive Index of the Bombay Stock Exchange.
Raw material costs rose 15 percent to 56.1 billion rupees in the quarter, while employee expenses rose 16 percent to 19.8 billion rupees, the company said.
India’s steel demand, which grew 9.9 percent in the last fiscal year, is likely to rise at a slower pace in the year that started April 1 as higher interest rates curb demand for cars and homes, G.K. Basak, executive secretary of the steel ministry’s joint plant committee, said on Sept. 9.
Steel Authority in August said it plans to invest 350 billion rupees to build a factory at a shuttered fertilizer plant in the eastern state of Jharkhand, sidestepping land-acquisition hurdles.