Lok Sabha Question No. 3141 (UNSTARRED), answered on 2016-12-05
Subject: Performance of Steel PSUs
Ministry: STEEL
Asked by: RABINDRA KUMAR JENA, T.G. VENKATESH BABU

## LOK SABHA UNSTARRED QUESTION NO.3141 FOR ANSWER ON 05/12/2016

## PERFORMANCE OF STEEL PSUs

3141.  SHRI RABINDRA KUMAR JENA: SHRI VENKATESH BABU T.G.:

Will the Minister of STEEL be pleased to state:

- (a) the  details  of  the  operating  ratio,  operating  profit,  net  profit/loss  and  debt  to equity ratio of all public sector steel companies including SAIL during each of the last three years, PSU-wise;
- (b) whether  the  SAIL  is  facing  a  cash  crunch  during  the  said  period,  if  so,  the details thereof and the reasons therefor; and
- (c) the  corrective  steps  taken/proposed  to  be  taken  by  the  Government  to  cut operational cost, improve efficiency and profits of all the steel PSUs?

## ANSWER

THE MINISTER OF STATE FOR STEEL

(SHRI VISHNU DEO SAI)

- (a) The details of the operating ratio, operating profit, net profit/loss and debt to equity  ratio  of  Steel  Authority  of  India  Limited  (SAIL)  and  Rashtriya  Ispat  Nigam Limited (RINL), during each of the last three years is given below:

## SAIL

|         |                             |           | Financial Year   | Financial Year   | Financial Year   |
|---------|-----------------------------|-----------|------------------|------------------|------------------|
| Sl. No. | Particulars                 | Unit      | 2013-14          | 2014-15          | 2015-16          |
| 1       | Operating Ratio             | Ratio (%) | 0.97             | 0.95             | 1.16             |
| 2       | Operating Profit(+)/Loss(-) | Rs. in Cr | 4192             | 3813             | -5152            |
| 3       | Net Profit(+)/Loss(-)       | Rs. in Cr | 2616             | 2093             | -4137            |
| 4       | Debt to Equity Ratio        | Ratio     | 0.59 :1          | 0.69:1           | 0.85:1           |

## RINL

|         |                               |           | Financial Year   | Financial Year   | Financial Year   |
|---------|-------------------------------|-----------|------------------|------------------|------------------|
| Sl. No. | Particulars                   | Unit      | 2013-14          | 2014-15          | 2015-16          |
| 1       | Operating Ratio               | Ratio (%) | 95.19            | 97.03            | 116.52           |
| 2       | Operating Profit(+)/Loss(-)   | Rs. in Cr | 578.40           | 276.46           | (-)1484.98       |
| 3       | Net Profit(+)/Loss(-)         | Rs. in Cr | 366.45           | 62.38            | (-)1420.64       |
| 4       | Debt to Equity Ratio (times)* | Ratio     | 0.41             | 0.75             | 1.05             |

* Preference  Share  Capital  of  Rs.  1,457  crore  was  redeemed  during  the  above period, completing total  redemption of Rs. 2,937 crore in the last 5 years.

(b) Due to subdued growth in consumption of steel and excessive imports leading to lower prices, the Indian Steel Industry has been going through a tough time. As a result  of  the  same,  the  average  Net  Sales  Realisation  (NSR)  for  SAIL  dropped sharply. The reduction in NSR of 20.3% during 2015-16 over 2014-15 has impacted the  profit  by  Rs.  8392  crore.  After  notification  of  Minimum  Import  Price  (MIP)  and anti-dumping duty by  the  Government, the prices  have  started  increasing  to  some extent. However, the price of imported Coking Coal (which is a prime and essential raw material for production of steel) has started firming up from July 2016 onwards. The  drop  in  NSR  coupled  with  increased  prices  of  coal  has  led  to  cash  deficit  in operation which has been met by way of additional borrowings from the market as well as the Banking System.

Accordingly,  the  borrowings  have  increased  from  Rs.  29898  crore  as  on 31.3.2015  to  Rs.  35144  crore  as  on  31.10.2016.  The  interest  expenses  have  also gone up from Rs.1454 crore during 2014-15 to Rs. 2047 crore in 2015-16.

- (c) The corrective steps taken by the Government are as under:
- (i) Government has notified Mines And Minerals (Development And Regulation) Amendment  Act,  2015  to  streamline  grant  of  Mining  Leases  in  order  to maintain  sufficient  availability  of  raw  materials  for  various  sectors  including steel sector.
- (ii) Increased peak rate of Custom Duty on steel to 15%.  Effective rate of import duty  was  increased  in  phases  to  10%  on  Long  products  and  12.5%  on  Flat products from pre-revised level of 5% and 7.5% respectively.
- (iii) Against  a  petition  by  the  domestic  steel  producers,  Safeguard  duty  on  HR Coils  of  20%  notified  in  September,  2015  provisionally  and  final  notification issued  for  the  same  in  March,  2016  extending  20%  Safeguard  duty  up  to September,  2016.    Thereafter,  phased  reduction  to  18%  (till  March,  2017), 15% (till September, 2017) and 10% by March, 2018.
- (iv) The Government of India notified Minimum Import Price (MIP) on select steel products (05.02.2016) and further extended it on certain steel products for two months with effect from 05.08.2016 and again for two months with effect from 05.10.2016.
- (v) Provisional Anti-dumping duty notified on import of flat products (Hot Rolled & Cold  Rolled)  and  on  Wire  Rods  from  China,  Japan,  Korea,  Russia,  Brazil, Indonesia  &  Ukraine  vide  notifications  dated  08.08.2016,  17.08.2016  and 02.11.2016.

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