Steel Authority of India Ltd (SAIL) has recorded a five-fold jump in fourth-quarter profit at Rs 2,647.52 crore, backed by a generous revaluation of sub-grade iron ore fines, to end the year on a profitable note and covering up the weak performances of its two Bengal-based units.

SAIL, which had posted a profit of Rs 548.20 crore in the Q4 of 2018-19, made a profit of Rs 2,120.71 crore on a consolidated basis in 2019-20, down 9.7 per cent from Rs 2,348.71 crore recorded in 2018-19.

Revenue slipped 7.2 per cent to Rs 62,569.95 crore annually and was down 11.4 per cent to Rs 16,574.71 crore quarterly.

The company, which produced 16.15 million tonnes in the last fiscal — the best in its history — managed to hold on to profit after it recognised 42.98 million tonnes of sub-grade iron ore fines as inventory which can be sold.

The valuation of the stock, lying at various mines of SAIL, was considered at Rs 4,120.85 crore and taken into account in the fourth-quarter result. The stock was recognised based on a government order which allowed such sub-grade fines to be sold, overturning a seven-year-old directive which had barred the sale of the material by any captive iron ore miner, including SAIL.

Bengal setback

The fines bounty also overshadowed the weak financial performance of two Bengal based units — Durgapur Steel Plant (DSP) and IISCO Steel Plant (ISP).

From a profit of Rs 586.63 crore (before interest, exceptional items and tax) in 2018-19, DSP recorded a Rs 107.87-crore loss in 2019-20. Burnpur’s ISP tumbled to a Rs 432.97-crore loss in the last fiscal from a profit of Rs 303.46 crore.

Both the plants were expanded and modernised by SAIL that spanned nearly over a decade covering the tenure of three chairmen and at a cost of no less than Rs 65,000 crore. The ISP plant was in fact almost built from the scratch as the company primarily utilised only the land of the erstwhile unit to put up the plant.

The modernisation and expansion took place in all the the other units of SAIL as well, such as Bhilai, Bokaro, Rourkela and Alloy Steel Plant — also at Durgapur.

The Rourkela and Bokaro plants also witnessed substantial squeeze in their profit margins but they ended in the green. Bhilai, the traditional topper within the SAIL universe, only bettered its performance in 2019-20 compared with the previous quarter.

On a quarterly basis, DSP fared better than ISP with the former ending in the green (Rs 45.78 crore in Q4), while the latter recorded a Rs 25.21-crore loss, segment result shows.

SAIL chairman Anil Kumar Chaudhary said: “SAIL has continued to earn profit consecutively for two years despite the challenging times.”