Tata Steel, the biggest Indian steelmaker, has seen a 47 per cent drop in profit, to Rs 789.8 crore, in the first quarter of this financial year ending June, compared to the corresponding period last year.
This is only the second occasion in the past three years that it has seen a drop in quarterly profit. An earlier drop, of 56 per cent, took place in December 2008. In the past seven years, quarterly profit has dropped only four times.
The cause is stated to be costlier coal and lower prices of steel. Production, excluding those in overseas subsidiaries, rose 30 per cent, but the company’s income failed to grow in parallel because of the drop in steel prices. The income was Rs 5,615.55 crore, down 8.7 per cent. From its captive mines, the company produces coking coal for 60-65 per cent of its requirement; the rest is bought from domestic and international markets. Coal prices went up by a factor of three during the quarter and so expenditure shot up 23 per cent. Moreover, the company had increased production and, so, the cost escalated, said B Muthuraman, managing director.
The raw material cost was 52.6 per cent higher at Rs 1,532.2 crore during the June-ended quarter. In the corresponding quarter last year, the company had an exceptional loss of Rs 303.4 crore and almost double the tax expense, of Rs 786.45 crore.
