While its bankruptcy resolution continues to negotiate fresh twists every passing month, Essar Steel has posted its best quarterly performance in the June quarter, bucking a muted business cycle in the global infrastructure industry. Crude steel production witnessed growth of 9.5% at 1.88 million tonnes and the company posted operating profit of Rs 1,120 crore in the quarter ending June.
This is more than twice Essar Steel had earned when administrators took over the debt-laden alloymaker about two years ago, according to sources aware of the development. Net sales increased in the quarter by 3% at Rs 8,100 crore
Operating profit is also 2.5% higher than the same period last year and more than double of the March quarter, when low steel prices had hit realisations for the entire steel industry. “The improvement has come due to cost efficiency and better inventory management, aided by better product mix,” said a banker aware of the resolution process.
He also said that the company is meeting working capital requirements through internal cash and is not borrowing anymore from banks. A court of appeals had cleared the way for ArcelorMittal’s takeover of Essar Steel in its ruling that came on July 5. The ruling, however, reduced the proceeds financial creditors were supposed to get under the previous arrangement cleared by the banks.