SAIL's input costs went up Rs 13,964 cr in FY08
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Steel Authority of India Ltd (SAIL), India's largest steel producer with a 26% share in total crude steel production, has seen its raw materials cost rise by 5% over the last year. The rise in the cost of raw materials such as coking coal, ferroalloys, nickel, silico manganese etc pushed up SAIL's expenditure by a whopping Rs 13,963.77 crore in FY08.
Company officials told DNA Money that the expenditure would have been higher if it wasn't for savings of Rs 328 crore achieved during the year through better fund management.
Ministry asks SAIL not to hike prices
The government has asked steel producers to hold prices. In this scenario, SAIL's heavy dependence on coal from both domestic and overseas suppliers assumes significance.
Until July this year, input prices for steel were on historical highs. Industry analysts said high raw material costs are bound to send the cost of production soaring and it is inevitable that the price of the metal goes up in the market. SAIL feels that at these prices, steel could come under the threat of substitution as end-users look for cheaper options.
Meanwhile, the company has taken steps to increase coking coal and thermal coal output in captive mines at Chasnalia, Ramnagore and Jitpur. It has also initiated the process of developing new coking coal at Tasra and Sitanala in Jharkand.
Sources said that SAIL has applied for licence and mining leases in new areas in Jharkhand and Orissa for iron ore, manganese ore, nickel and chromium ore.
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