NEW DELHI: The global economic slowdown has brought the best from state-owned steel maker SAIL as the company has become the most profitable

steel company globally beating steel biggies such as ArcelorMittal, Posco, Bao Steel, Nippon in the half yearly profits.

The company has reported net profit of $ 571 million in the January-June period of 2009 bucking the trend where most global steel companies have made losses. Only Korean steel maker has come closer to match SAIL reporting a net profit of $ 565 million in the first half current calendar year.

“SAIL’s performance during the first half of 2009 has been best in the world steel industry because of a series of steps that the company took in response to the economic downturn. Not only did the company improve performance on techno-economic parameters, it lay thrust on value added products and cost efficiency. The efforts have been aided, by consistent growth in domestic steel demand,” SAIL chairman S K Roongta told ET.

Being a zero debt company, SAIL has also been able to reduce its interest cost substantially. It has also rationalised manpower reducing its workforce by 7,500 people in 2008-09 and another 6000-7000 people would reduce in 2009-10.

The performance of SAIL mirrors the improved showing given by other domestic steel companies. Steel demand in the country has grown month-month in the current financial year and is projected to grow by 10% for the full year. Even World Steel Association (Worldsteel) has forecast that while the global steel consumption this year is set to fall by around 15% to 1,019 million tonnes, use of steel in India would grow by about 2%.

In terms of profit during the January-June period, POSCO is the only international company coming closer to SAIL. ArcelorMittal has reported net loss of $1855 million during the period while Nippon has reported a loss of $1043 million, Severstal a loss of $944 million, US Steel loss of $831 million, Bao Steel a profit of $98 million.

Another Indian steel company, Tata Steel has emerged as the third most profitable company during the period, reporting a profit of $458 million. The profitability is only for its domestic operations not including the operations of Corus.

The comparison has been make using the average of dollar rates prevailing during the first half of 2009.

“Europe and America may take another couple of years to recover fully after which we may see a rise in demand there. Till that time only Indian and Chinese companies are expected fare well,” said an analyst.
ET...