By Krishna N Das
NEW DELHI (Reuters) - Steel Authority of India Ltd (NSI:SAIL.NS - News), the country's largest domestic steelmaker, is sticking to its target of importing 12 million tonnes of steel-making coal this fiscal year despite a weaker rupee inflating costs, its chairman told Reuters on Thursday.
The fall in the rupee, which hit record lows in late August and is down about 11 percent so far this year, has forced some small steel companies to rethink or delay coal purchases, importers and brokers say.
Every one rupee fall in the Indian currency compared with the dollar raises SAIL's costs by 1.5 billion rupees per year, Chairman C.S. Verma said. SAIL spent more than 135 billion rupees on coal in the last fiscal year.
"I can't remain insulated from the volatility in the rupee," Verma said. "But if I have to run my steel company, I'll have to import. There's no coal available in India of the type we need."
About two-thirds of SAIL's coal requirement comes from Australia, with the rest coming from the United States, said Verma, who is also the head of NMDC Ltd (NSI:NMDC.NS - News), India's largest iron ore producer.
SAIL, NMDC, Coal India Ltd (NSI:COALINDIA.NS - News) and power company NTPC Ltd (NSI:NTPC.NS - News) are part of a joint venture called International Coal Ventures Private Ltd (ICVL), which has been scouting for coal mines abroad to secure India's coal needs.
"We're carrying out due diligence of some properties," said Verma, who is also chairman of ICVL. A delegation of ICVL would visit Poland to know more about coal reserves there, he added.
"The impact of rupee depreciation will get more than offset by way of higher realisations as (our) domestic steel prices are linked to landed cost of imports," JSW Steel Joint Managing Director Seshagiri Rao told Reuters in an email.
(Editing by James Jukwey)