Steel Authority of India was bolstered by statements from the company's chairman about its prospects for the current year.

The stock of the state-run steel major spurted 6.60% to Rs 10.50 by 10:20 IST, as a consequence. Substantial volumes of over 8.7 lakh Steel Authority of India (Sail) shares were exchanged on BSE by then.

It seems pretty much like turnaround times in the offing for the company and the last quarter results are expected to be an indication to that. The company's chairman V S Jain said on Tuesday that the company is likely to reduce losses by more than 70% in 2003-04. The company's optimism stems from the 6% growth in sales that it is currently experiencing. Financial management has helped reduce debt by Rs 800 crore. Interest payment, therefore, is down by Rs 300 crore. Cost reduction netted a saving of Rs 400 crore, Jain added.

For the quarter ended 31 December 2002, Sail posted an 86.54% fall in net loss to Rs 78.75 crore (loss of Rs 585.38 crore) on a 26.58% increase in total income (net of excise) to Rs 4,473.38 crore (Rs 3,533.78 crore). The company reported a cash profit of Rs 215 crore for the quarter. Sail had saved around Rs 250 crore through cost-cutting measures in the first nine months of the previous financial year.

The surge in the company's DQ 2002 sales was aided by an impressive 52% jump in sales of the Rourkela steel plant (RSP), followed by 31% rise in sales of the Bokaro and Salem steel plants. The flagship and the company's most profitable plant, Bhilai Steel, reported a 19% rise in sales.

Meanwhile, the fall in global steel prices following the inventory pile-up in Chinese ports has exerted pressure on domestic prices as well. China is one of the biggest importers of steel following the huge infrastructure emphasis in the country. The stock build-up in China is in anticipation that the nation may re-issue new import quotas from 24 May 2003, after the old quotas expired last month.

Sail plans to increase its exports to China in the current year.

On the domestic front, prices are expected to stabilise at levels higher than that of last year. The construction and automobile sectors will provide the limit to any downside in demand for steel. The capital goods industry is also expected to register strong demand .

At the same time, a greater thrust on infrastructure projects, including national highway and roadway projects, will only serve to enahnce demand for steel. The global steel industry has seen a growth of about 5% during the current financial year, compared with 2-3% in 2001-02. The Indian market has also shown healthy growth, expanding about 6%.