MUMBAI, June 25: Essar Steel Ltd, the flagship of the Rs 140 billion Essar group, has earned a net profit after MAT of Rs 9.62 crore during the year ended March 1997 against a Rs 128.29 crore profit last year. The lower profit is mainly due to higher provision of interest and depreciation. The directors, however, maintained the dividend at 10 per cent.

However, the company has reported over 200 per cent increase in turnover of Rs 1,842 crore for the year compared to Rs 590 crore last year. The company has earned a gross profit before interest of Rs 544.34 crore against Rs 175.79 crore last year. The company had made a loss of Rs 47 crore in the first half of the year.

Announcing the working results here today, the group vice chairman Ravi Ruia said that commencement of commercial production, leading to higher depreciation charge of Rs 248 crore (Rs 45 crore) and interest of Rs 285 crore (Rs 2.30 crore) coupled with weak market conditions prevailing in the steel industry, have resulted in the company earning a profit after MAT of Rs 9.62 crore.

The company's operating margins are commendable at 35 per cent of sales (net of excise duties) when compared to the performance of other steel majors. This has been achieved through judicious inventory and receivables management during the year-finished goods inventory at 83,000 tonnes and raw materials inventory at four months production and receivables at about 90 days, he added.

J Mehra, the company's managing director, said the company would concentrate on value added items and the endeavour would be to cut the inventory to three months stock from the present four months.

The sales for the first quarter this year had gone up by 47 per cent and the aim would be to achieve a capacity utilisation of 90 per cent this year.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.