Tata Steel net dips 15% to Rs 753 cr

Tata Steel today reported a 15 per cent decline in net profit at Rs 753.74 crore in the quarter ended December 2005 from Rs 890.51 crore in the corresponding quarter of the previous year. Its profit before tax was down by about 17 per cent at Rs 1,131.47 crore from Rs 1,372 crore.

Analysts said rising inputs costs and pressure on the price of finished steel were responsible for the poor show at the country's largest private sector steel company.

Tata Steel's net income was marginally down by 1.3 per cent at Rs 3,680 crore from Rs 3,731 and gross income was up by 2.32 per cent to Rs 4,185 crore in the third quarter in 2005-06 from Rs 4,090 in the same quarter in 2004-05.

The fall in turnover and profits, according to analysts, was mainly due to the price of ferro-alloys, which during the period fell by 4-4.5 per cent. The pressure on the prices of ferro-alloys is expected to continue into the last quarter of 2005-06.

The prices of raw materials in the third quarter increased to Rs 612.77 crore, up by 26 per cent over the same quarter of 2004-05.

Power costs, too, moved up by 16 per cent during the quarter to Rs 202.42 crore.

The company's scrip fell marginally on the Bombay Stock Exchange today. Opening at Rs 359.9, the scrip initially went down to a low of Rs 349.05 before recovering to end at Rs 357.2, a drop of 1.48 per cent from Friday's close.

Stock market sources said the recovery of the stock indicated that the company's performance was better than market expectations.

For the nine months ending 31 December 2005, the company's net profit was up by 6.15 per cent at Rs 2,723 crore from Rs 2,565 crore in the same period last year. Net income was up 3.53 per cent at Rs 11,010 crore from Rs 10,634 crore in the corresponding periods.

Profit before tax rose 0.64 per cent to Rs 4,050 crore from Rs 4,024 crore over the corresponding periods. The gross income increased from Rs 11,603 crore to Rs 12,541 crore, a rise of about 8 per cent.

Industry observers had said the import of steel from Russia and the Ukraine had also been on the rise and domestic prices in the past year had fallen by almost 30 per cent.

"Additional imports during the quarter were almost a million tonnes and 50 per cent of these have come from Russia and the Ukraine. We are also witnessing new exporters of steel accessing the Indian market, like Egypt and Iran. Even China has become a net exporter of steel into India," said an industry analyst.