Steel Authority Profit Falls as Alloy Prices Drop, Costs Rise
Steel Authority of India Ltd., the nation’s second-biggest producer, posted a 23 percent drop in third-quarter profit, missing analyst estimates, as alloy prices fell and raw material taxes increased.
Net income declined to 4.84 billion rupees ($90 million), or 1.17 rupees a share, in the three months ended Dec. 31 from 6.32 billion rupees, or 1.53 rupees, a year earlier, according to an exchange filing today. That missed the 6.1 billion-rupee median profit estimate of 28 analysts surveyed by Bloomberg. Sales fell 1 percent to 104.9 billion rupees.
India’s cabinet in April increased royalties on coal, raising prices of the fuel used by Steel Authority to generate electricity for making the alloy. The royalty on coal was increased to a flat 14 percent of the notified price, compared with a 5 percent royalty and a fixed levy ranging from 55 rupees ($1) to 130 rupees a metric ton earlier. Steel prices declined about 5 percent in the last quarter as an economic slowdown cut sales of cars and homes.
Total costs increased 4 percent to 99.4 billion rupees, according to the statement. The company’s earnings from sources other than its main business fell 42 percent to 2.21 billion rupees. Sales fetched an average 35,168 rupees a ton in the last quarter, 6 percent less than a year earlier, while sales volume gained 5 percent to 2.75 million tons.
Shares of the New Delhi-based company rose 0.6 percent to 81.20 rupees at close of trade in Mumbai. The benchmark Sensitive Index gained 0.5 percent.
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