Financial Daily from THE HINDU group of publications
Friday, May 31, 2002
Corporate Results - Steel
Tata Steel net dips 63%
MUMBAI, May 30
TATA Iron and Steel Company Ltd (Tata Steel) on Thursday reported a 62.97 per cent decline in net profit to Rs 204.90 crore for the year ended March 31, 2002, as against the previous corresponding Rs 553.44 crore.
The company's net sales/income from operations dipped marginally to Rs 7,607.48 crore (Rs 7,759.44 crore).
Last year saw sluggish steel demand and over-capacity together drive global prices to a 20-year low. In line with this, domestic steel prices also declined, the resultant dip in realisation restricting turnover despite improved product mix, Tata Steel said in a statement.
"In view of the interim dividend of 40 per cent declared on May 16, 2002 for the year 2001-02, it has been decided not to recommend any final dividend," it added.
While product mix in FY2002 was semis - 13 per cent (19 per cent); CR - 29 per cent (19 per cent) and HR - 38 per cent (46 per cent), in FY2003 it will change to semis - six per cent; CR - 35 per cent and HR - 32 per cent.
The actual variable cost per tonne of HR coil at Tata Steel was pegged at $148 as against the $186 of South Korea's Posco. In quite a few parameters - including EBIDTA as a percentage of net sales - Tata Steel has been closing the gap between itself and China Steel and Posco placed above it, Mr B. Muthuraman, Managing Director, Tata Steel, said at a press briefing.
Total steel production last year was 3,596,265 tonnes (3,413,318 tonnes) and sales, 3,596,265 tonnes (3,401,392 tonnes).
The company's manpower declined by a further 2,500-odd people. Weighted average cost of capital dipped to 12.75 per cent (14.70 per cent) while net working capital fell to Rs 1,088 crore (Rs 1,138 crore).
Last fiscal, Tata Steel repaid Rs 1,100 crore taking total outstanding debt to Rs 4,400 crore. In 2002-03, it plans to repay around Rs 200 crore, Mr R.C. Nandrajog, Vice-President (Finance), Tata Steel, said.
In Q4 2001-02, Tata Steel had a net profit of Rs 122.47 crore (Rs 209.01 crore) on net sales/income from operations of Rs 2,160.93 crore (Rs 2,353.50 crore).
Tata Steel will be increasing steel prices by Rs 500-800 per tonne on June 1, Mr Muthuraman said. Though long-term stability of higher price depends on real demand growth, he estimated the June price rise as well as earlier ones effected in April and May to be sustainable.
Putting it in perspective, he said this year prices have risen in the US and elsewhere in the world, but recovery so far in India is yet to match the roughly Rs 2,300 decline per tonne in flat product prices seen over FY2001 and FY2002.
During 2001-02, domestic demand for steel grew by just 1.3 per cent. Global steel demand was also sluggish at 768 million tonnes in calendar 2001 (769 million tonnes). In the 2002 demand estimate of 784 million tonnes, China and India feature among few economies slated to show a rise in steel offtake.
For 2002-03, the company's capital expenditure is pegged at Rs 480 crore. Its hot metal production this year is estimated at 4.4 million tonnes.
Research facility planned
TATA Steel has been promoting the use of products from its cold rolled mill, in the domestic automobile industry. Clients include Tata Engineering, Fiat, Hyundai and Mahindra & Mahindra. Maruti Udyog is at present testing the steel products.
The company, which has an alliance with Arcelor and Nippon Steel to further automotive applications of its CR steel, should eventually have its own automotive research facility in line with the trend at steel majors abroad, Mr H.M. Nerurkar, Executive In Charge (Flat Products), Tata Steel, said.
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