The net profit of the Tata group steel major, Tata Iron and Steel Company (Tisco), dropped by 31.35 per cent in 1997-98 to Rs 322.08 crore from Rs 469.21 crore in the previous year.
Tisco's sales turnover, however, was up by a slender 1.38 per cent to Rs 6,433.49 crore from the previous year's figure of Rs 6,351.45 crore. The company's steel production during the previous fiscal rose to 2.971 million tonne, up from 2.783 million tonne. Sales rose by 9 per cent to 2.821million tonne from 2.583 million tonne in the previous year. The operating profits of the company declined to Rs 995.34 crore in 1997-98 from Rs 1164.13 crore in the previous year.
The board has recommended a lower dividend of 40 per cent as against 45 per cent paid in 1996-97. "While the board views the future of the steel industry positively, in view of the decline in net profit of 31 per cent, together with the uncertainty surrounding the near term, the directors have recommended a dividend of Rs 4 per share," a company press release said.
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Tisco's total income rose to Rs 6,516.49 crore during 1997-98 from Rs 6409.43 crore in the previous year. The company's other income rose to Rs 83.09 crore from Rs 57.97 crore in the previous year. Depreciation costs rose to Rs 343.23 crore from Rs 326.63 crore in the previous year. The company capitalised expenses to the tune of Rs 185.57 crore in 1997-98 as against Rs 134.53 crore in the previous year. Interest costs dropped during the year under review to Rs 259.68 crore from Rs 274.36 crore in 1996-97.
The total expenditure in 1997-98 was Rs 6,041.06 crore, up from Rs 5,788.52 crore in the previous year.
The profit before taxes and employee separation was down to Rs 475.52 crore in 1997-98 as against Rs 620.91 crore in the previous year. The employee separation compensation cost the company Rs 112.19 crore in 1997-98 as against Rs 78.70 crore in the previous year.
Tisco's PBT for 1997-98 was Rs 363.33 crore, down from Rs 542.21 crore in the previous year.
The company provided Rs 41.25 crore towards MAT, down from Rs 73 crore provided in the previous year.
"Despite a slowdown in industrial growth resulting in a decline in the consumption of steel in the domestic market, the company recorded a rise of 9.74 per cent domestic sales volumes to 2.3388 million tonne thereby increasing its overall market share," the company release said.
"Although the export market was severely impacted by the events in South East Asia, which were a major destination for the export of the company's products till the middle of the financial year, the company managed to increase its exports by 6 per cent to 0.433 million tonne," the release added.
"The increase in the inventory of finished products was marginal at Rs 447 crore as on April 1, 1998 as against Rs 444 crore as on April 1, 1997," the release said.
The company claimed that improvements in operational efficiencies and strong volume growth partially offset the pressure on margins due to reductions in net realisations and mandatory increase in input costs.