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Steel Authority of India Ltd profitability might see a further dent in the near-term over next four to six quarters due to an impending wage revision for employees. Wage revision for over one lakh employees, excluding officers, is due for January 2012 and the employee unions are demanding a higher increase. There is a possibility that the wage costs might increase by Rs 1,000 crore to Rs 1,500 crore annually. SAIL's employee costs for the financial year 2012 are estimated at Rs 8,000 crore.

Based on the current revenue, employee wages account for about 20 per cent of SAIL's turnover. The incremental rise in wage costs would further dent the margins by two percentage points in the near term for the next four to six quarters.  SAIL's operating profit margins, impacted by the rising input costs such as coking coal, stood at 12 per cent in the July-September quarter.

However, the SAIL management is confident that wage costs would come down with the increase in production over next couple of years. SAIL is implementing a modernisation plan which would increase its capacity from 14 million tonnes per annum (mtpa) to 24 mtpa by 2014.

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