Agency reports indicate that Steel Authority of India (SAIL) would take a hit of roughly around Rs 125-130 crore on an annual basis for every one rupee depreciation.
But the falling price of the coking coal, a key input in steel-making, may reduce the impact of rupee depreciation on the finances of the company. SAIL requires to import around 10 million tonne of coking coal a year to fire the blast furnaces.
Owing to increased supply, coking coal prices declined sharply to hover around $130-140 a tonne now, from $300 a few months ago.
SAIL imports around 70 per cent of its coking coal needs. A majority of them come from Australia and the US. The company has been making efforts to strengthen its captive supply, but that make take some time to actually fructify.
With SAIL raising its steel-making capacity to 19 million tonne per annum (mn tpa) by the end of the current fiscal from 14 mn tpa now, the need for imports of coking coal would go up further.
Value of the Indian rupee declined almost 12 per cent since the start of May and it depreciated to a record low of 61.21 recently.
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