As expected, the downturn in the international prices for flat products has taken a toll on the private sector steel giant Tata Iron and Steel (Tisco) during the first quarter ended June 2001.
Tisco's performance for first quarter of 2001-02 has hit a 10-quarter low, with sales declining 6.76 per cent (second lowest in the previous 13 consecutive quarters) and the highest ever decline in net profit at 79.75 per cent.
Tisco's current woes go back to the lean year of 1997-98 when international steel prices started dipping. The company's sales then had fallen 9.61 per cent during the quarter ended September 1998 and net profit fell 37.57 per cent.
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The company has posted a drop in sales in as many as four of the last 13 quarters. The company had a single digit growth in sales on five occasions and a double digit growth on as many as four occasions.
Much in the line with the steel industry, even in good years, Tisco's net profits have been thin. The company's net profit declined in as many as 7 quarters (of the previous consecutive 13 quarters).
Of these 7 quarters, net profits have declined over 50 per cent in three quarters, including the quarter ended June 2001.
The company reported a hefty rise at the end of four quarters. In the quarter ended December 1999, the profit zoomed 802 per cent, followed by 309 per cent in net profit in quarter ended June 2000 and another 76 per cent during the quarter ended September 2000.
The result for the quarter ended June 2001 looks more healthy, largely on account of unrealised sales. As a result, the company has posted huge increases in finished goods and stock-in-trade inventory.
During the first quarter of 2001-02, the company's inventory increased to a hefty Rs 235.68 crore compared with Rs 81.19 crore in the same quarter of the previous year. Compared to this, the net profit was Rs 20.53 crore against Rs 101.40 crore in Q1 of 2000-01.