InvestorQ : Why did SAIL dip into such huge losses in the Jun-20 quarter?
diksha shah made post

Why did SAIL dip into such huge losses in the Jun-20 quarter?

Arya Nanda answered.
11 months ago

Steel demand has been in the doldrums in the last few months since the lockdown started as most of the steel users like construction, white goods and automobiles had to virtually shut down operations for close to 45 days in April and May.

As a result, SAIL reported a net loss of Rs.1226 crore for the Jun-20 quarter. This can be directly attributed to lower revenues, insufficient to cover fixed costs. For the Jun-20 quarter, total sales revenues of SAIL were 24% down at Rs.11,325 crore.

It was the COVID-19 effect all over again. The factory operations of SAIL were substantially affected by the downstream impact of the pandemic lockdown and the lag effect of the pandemic in the form of supply chain constraints and labour shortages.

It must be said that manufacturing did commence at SAIL in May but the damage for the quarter had been largely done and dusted. Additionally, the social distancing restrictions imposed by the government put limits on how quickly output could get to pre-COVID levels.