The Hindu : Business : Tata Steel net doubles

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Friday, May 20, 2005

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Business

Tata Steel net doubles

Staff Correspondent

The board has recommended a dividend of 130 per cent

FORGING AHEAD: The Managing Director of Tata Steel, B. Muthuraman, addressing a press conference in Mumbai on Thursday. — Photo: Paul Noronha

MUMBAI: In spite of spiralling raw material prices, Tata Steel, by virtue of a richer product mix and stringent cost control, has announced a 99 per cent jump in net profit at Rs. 3,474.16 crores (Rs. 1,746.22) crores on sales of Rs. 15,876.87 crores (Rs. 11,920.96 crores) for 2004-05. The company also reported a 37 per cent rise in export revenues at Rs. 2,043 crores and the board has recommended a dividend of 130 per cent.

The operating profit for the year was at Rs. 6,045.36 crores (Rs. 3,495.41 crores). For the fourth quarter ended March 2005, Tata Steel reported a net profit of Rs. 908.58 crores (Rs. 628.88 crores) on sales of Rs. 4,273.13 crores (Rs. 3,490.05 crores).

The company is expanding its Jamshedpur Steel Works from four million tonnes to five million tonnes annually at a cost of Rs. 2,200 crores and signed a Memorandum of Understanding in November 2004 with the Orissa Government to set up a six million tonne integrated steel plant at Kalinganagar in Orissa. The capital expenditure programme for the current year is Rs. 2,900 crores that will include the Jamshedpur expansion. The company is in the process of finalising a 11-year $300 million loan from the International Finance Corporation, which has been benchmarked at competitive rates.

"The financial performance must be seen in context. Our one million tonne expansion was carried out in a running plant, which also had to see a 110-day shutdown of our G blast furnace. In spite of this, we maintained salable steel production. Last year, raw material prices rose faster than steel prices and when prices were high, we dropped prices by Rs. 2,000 a tonne in August 2004, maintaining it through the year for more than 60 per cent of our customers,'' said B. Muthuraman, Managing Director, Tata Steel. "We are increasing our supplies to the automobile sector where the potential for value creation and differentiating from other steel players is high. Also, it is a major growth sector in India.

"Over 90 per cent of the wheels on Indian roads are made by our steel and we have a 50 per cent market share in auto direct and a 43 per cent share in supplies to auto ancillaries. We sold 6.15 lakh tonnes of steel to the auto industry last year and this year, plan to sell nine lakh tonnes. It is our conscious decision to supply steel to the auto industry at lower prices than competition or imported steel,'' said Mr. Muthuraman.

Regarding the ferro chrome project in South Africa, the Tata Steel chief said contrary to popular belief, the company was not moving out of that country. "We have had a setback and there will be a delay of around 18 months as we are moving to another location.''

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