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| Tata Steel net profit falls 49% on lower price |
| BS Reporter / Mumbai Oct 28, 2009, 00:43 IST |
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Tata Steel, the sixth-largest steel maker in the world, has posted a 49.49 per cent drop in net profit at Rs 902.94 crore in the second quarter, following a sharp fall in steel and ferro alloys’ prices. Total income fell 16.46 per cent to Rs 5,692.11 crore.
Despite a 14 per cent rise in steel production on a standalone basis, the company witnessed a decline in average realisation to Rs 40,000 a tonne in the September ended quarter from Rs 29,000 a tonne during the same period last year, according to Managing Director H M Nerurkar. He added the price is expected to be stable in the second half of the financial year as demand from segments like automotive, capital goods and appliances is improving.
Indian steel prices fell almost 35 per cent from a year earlier, lowering profits for local steel makers. The global steel market has bottomed out and will grow 9.2 per cent next year as demand rebounds in the US, Europe and Japan, the World Steel Association had said recently.
Even if the prices are soft, it would not affect margins as coal prices have come down from last year’s levels and the company is self-sufficient in its iron ore needs, Tata Steel Group Financial Officer Koushik Chatterjee said.
During the quarter, the company benefited from the expansion of capacity at its plant in Jamshedpur, which now produces over 6.5 million tonnes of steel annually, compared with 5 million tonnes earlier. The sale volume went up 19.4 per cent to 1,456,755 tonnes. However, export turnover dropped halved to Rs 515.11 crore.
The company has Rs 6,100 crore cash and cash equivalent on books, while debt stands at Rs 24,436 crore. Shares of Tata Steel, which more than doubled this year on expectations that the government’s infrastructure spending will spur sales, fell 7.26 per cent to Rs 501.30 on the BSE.
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