Tata Steel Q 1 net up 24% to Rs 924 crore

CORPORATE SCORECARD

Tata Steel reported a net profit of Rs 924 crore in the company's first quarter ended June 30, 2005, a 24 per cent growth over Rs 745.5 crore in the corresponding quarter the previous fiscal.

The company's net sales stood at Rs 3, 465 crore, a growth of 9.51 per cent, compared with Rs 3,164 crore reported in the corresponding quarter the previous year.

Tata Steel's topline growth was below expectations of the leading steel analysts who predicted about 30 per cent growth in sales for the quarter under review.

However, analysts were happy with the overall margins reported by the company. Analysts are predicting a turnaround during the third quarter of the fiscal.

The company achieved better operating margin of 45.8 per cent for the quarter under review against 44.3 per cent for the corresponding quarter the previous year.

For the quarter stated, the company's steel production was down at 9.45 lakh tonne compared with 9.93 lakh tonne for the corresponding quarter the previous year.

"As steel prices keep falling, dealers defer their stocking up of steel for future as they expect prices to fall further. This leads to piling up of the inventory. Automatically, it cuts production in the hope of liquidating the inventory," said a leading steel analyst in the country.

Global steel prices have fallen over the past couple of months. Steel prices in India, at present, have come down to Rs 22,000 per tonne, a 30-40 per cent decline, compared with Rs 29,000 per tonne three months ago. Global steel prices have come down to $ 400 per tonne from $ 700 a few months back.

Tisco and other large steel companies like Steel Authority of India Ltd (Sail), Jindal Steel, Essar and Ispat have recently cut steel prices in the range of Rs 2,000 to Rs 3,000 per tonne. This was the second cut in recent months. It followed a cut in April when some of the companies had cut prices by about Rs 2,000 per tonne.