SAIL in the red

SAIL is down in the red today, opening lower at Rs.103.35 and currently down 1.2% at Rs.102, with an intra day low at Rs.101.75.

The stock is in the red due to two not-so-good news. First was the news that 6 people were dead and 35 were injured after a poisonous gas leaked at SAIL’s Bhilai Plant in Durg district of Chhattisgarh yesterday. And this apart, the Steel Ministry yesterday approved a 17% hike in basic and dearness allowances and 6%  rise in perks for the company's non-executive employees.  SAIL revises pay every 5-years and this decision has been pending since January 2012. And it is expected that the immediate outgo will be over Rs 2,300 crore.

The company, for FY14 had a consolidated outgo of Rs.9594 crore on employee expense alone, which on the net profit of Rs.2632 crore for the year, is indeed a huge expense. And to think that this fiscal, we will see more outgo, is what has unnerved the market.