After a disastrous year, in which prices hit a 20-year- low, manufacturers spot an upturn on the horizon.

It’s not often that a company declares a whopping 63 per cent drop in profits, yet suggests it has bucked the industry trend. That’s what B. Muthuraman, managing director, Tata Steel, claims to have achieved, along with global steel majors like China Steel. He may be right you know, for when it comes to the steel sector you can’t go by profits (or losses) when passing judgment. Because demand for steel, globally and domestically, has been sluggish. Because there’s been a 7 per cent average drop in prices between 1995 and 2001. Because there’s chronic over capacity in the country-200 million tones at last count. Because domestic prices have been hammered lower than the landed prices of imported steel.

It’s been worse for SAIL, whose losses bloated to Rs.1,707 crore last year (from Rs.729 crore in 2000-01). Of course, you could attribute a fair share of those losses to the inefficiencies at SAIL’s manufacturing units, but when company officials point out that Rs.1,000 crore of the losses was courtesy the steep 8 per cent drop in sales realisations you’re inclined to believe them. What’s more last year was particularly bad for flat products – with prices hitting a 20-year low – which account for 60 per cent of SAIL’s product mix.

Tata Steel, for its part, produced 5 per cent more and sold 4 per cent more last year, in the process beating the industry growth rate of 1.3 per cent. "(That’s because) we’re more modern than most steel producers in the world," says Muthuraman. Things are looking up at SAIL as well. It sold a record 1.42 million tonnes of steel products in the home market in April-May 2002, thereby, achieving a 36 per cent growth as compared to the performance in the same period last year.

The good news for the steel sector is that the worst appears to be over. Analysts way that China and India are the only countries whose steel industries will register growth in the current year, of 7 per cent and 4-6 per cent, respectively. That’s why Tata Steel has gone in for its third price hike in recent months, although Muthuraman stresses that the cumulative increase of Rs.1,500-1,800 is still lower than the Rs.2,300 drop in prices last year). SAIL too expects a hike in prices to augur well for the company this year. But it will clearly take more than firmer prices to wipe out that huge blot of red on this PSU’s bottomline.