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SAIL Exhibits Strength

May 20, 2008

Steel Authority of India (SAIL) reported robust numbers for the quarter ended March 2008. Revenues for the quarter rose 32.8% YoY to Rs 137.9bn on the back of sharply higher realizations, with record saleable steel production of 3.5mn tons and improved product mix. However, bottom-line growth lagged that of the top line mainly due to higher employee costs (additional provision of Rs 15.9bn), which rose 100% YoY due to wage revision of employees, w.e.f 1 Jan 2007.

EBITDA margins declined by 260bps YoY, primarily due to higher employee costs. Profits rose 25% YoY to Rs 23.7bn. For FY08, the company reported an 18.2% growth in revenues (including price escalation) and an EBITDA of Rs 122bn, up 24% YoY. Operating margins for the year stood at 29.7% vs. 28.3%.

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