SAIL to have better year ahead, predicts Moody’s

SAIL CMD Verma

GOOD news for nation's leading steel maker Steel Authority of India Ltd (SAIL). Domestic steel majors such as SAIL, JSW Steel and Tata Steel will have a better year ahead on the back of capacity expansions and higher utilisation, leading to rise in profitability, global ratings agency Moody’s said.

“Capacity additions and high utilisation rates at existing plants will boost profitability for large Indian producers such...

as JSW Steel, SAIL and Tata Steel,” it said in its Asian steel industry outlook for the next year.

Saying that the profitability of the Asian steelmakers had bottomed out, Moody’s Investors services said their profitability would increase slightly in 2015 as capacity growth slows, unlike major Indian firms, and utilisation rates rise.

“Demand for steel will likely increase a modest 3 per cent, outpacing net production capacity additions and driving increased utilisation rates. Declining raw material costs will also support the steelmakers’ profitability,” said Jiming Zou, Moody’s Assistant vice president and analyst.

The agency, which accords a stable outlook for the industry, said steel demand and capacity growth in China would drive the outlook, as the country is by far the region’s largest consumer and producer of steel.

“But the country’s steel producers remain the least profitable in Asia because of domestic oversupply,” it said, adding, however, that conditions for steelmakers vary across Asia.

In a related development, (SAIL) has said that it has sold its entire 26 per cent equity holding of 3,47,49,000 equity shares of Rs 10 each in Bokaro Jaypee Cement to to Shri Rangam Securities & Holdings Ltd (SRSHL) at Rs 67.50 per share, totalling Rs 234.56 crore.

Bokaro Jaypee Cement is a joint venture of SAIL and Jaiprakash Associates.

The news came at a time when the Centre is all set to sell five percent satake in SAIL.

SAIL's present production capacity is 17.5 MT and it plans to incrase its capacity would increase up to 50 million tonne by 2025.

The Maharatna PSU is India's largest steel producing company. With a turnover of Rs 49,350 crore, the company has five integrated steel plants, three special plants, and one subsidiary in different parts of the country.