Tata Steel Q2 net up 8%

Tata Steel, the country's largest private sector steel manufacturer, has posted an 8.11 per cent increase in net profit at Rs 1,190.83 crore for the quarter ended September 30, 2007 on the back of foreign exchange gains and higher sales to carmakers and constructions companies. Net profit in the corresponding quarter last year was at Rs 1,101.49 crore.

Net sales climbed 13.87 per cent to Rs 4,785 crore, as against Rs 4,202 crore in the previous corresponding period.

The company gained Rs 90 crore on foreign exchange due to the appreciation of the rupee. For the half year the net gain on foreign exchange was Rs 643.33 crore.

However, a 10 per cent increase in total expenditure and higher interest payback afffected operating margins somewhat.

Steel prices in China, a regional benchmark, have risen 12 per cent since July, helping Tata Steel hasten repayment of debt raised to buy Corus Group Plc. Interest payments surged fourfold to Rs 202 crore in the quarter.

"Healthier demand from the automobile sector and construction sector has pushed sales for the company," said a Mumbai-based analyst.

Rising iron ore prices have been a worry for many steel makers. But analysts believe that while costs could escalate in the current quarter, they should begin to ease in the fourth quarter.

Tata Steel said production during the quarter rose to 1.28 million tonnes from 1.26 million tonnes in the corresponding period last year.

Analysts expect a better performance in the forthcoming quarters on higher prices and strong demand from the domestic and international markets.

Tata Steel closed 0.17 per cent up (or Rs 1.70) at Rs 990.60 on the Bombay Stock Exchange, a record closing. The stock earlier gained as much as 6.1 per cent.