The Hindu Business Line : Corus lifts Tata Steel profit

Growing stronger: Mr B. Muthuraman (left), Managing Director, Tata Steel, and Mr Philippe Varin, CEO, Corus Group, at a press conference in Mumbai on Thursday.

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Mumbai, June 26 Tata Steel almost tripled its consolidated net profit for the last fiscal to touch Rs 12,321 crore, as compared to Rs 4,165 crore in the previous year, mostly boosted by its acquisition of Anglo-Dutch steel maker, Corus, last year.

Corus, which Tata Steel bought after a fierce bidding war with Brazilian steel maker CSN, contributed about $2 billion to Tata Steel’s consolidated profits.

Its consolidated income during the year was Rs 132,110 crore, up from Rs 25,650 crore in the previous year. The consolidated figures include operations in Thailand and Singapore.

The stand-alone net profit and income from operations were Rs 4,687 crore and Rs 20,028 crore, as compared to Rs 4,222 crore and Rs 17,984 crore respectively in the previous fiscal.

The company had a foreign exchange gain of Rs 594.72 crore during the year.

However, the company’s crude steel production from its Indian operations marginally fell to 5.01 million tonnes from 5.5 million tonnes, mostly on account the shutdowns related to the ongoing 1.8 m.t. expansion at its Jamshedpur unit.

Better synergies

Mr B. Muthuraman, Tata Steel Managing Director, told reporters that the expected synergies of $ 450 million annually with the Corus integration would be exceeded. He said the company had set itself a target of increasing its Return-On-Invested-Capital to 30 per cent by 2012. This is expected to be achieved through steady performance improvement, blast furnace expansion at Jamshedpur plant from the present 5 million tonnes to 6.8 m.t. this fiscal, and finally to 10 m.t. by 2012 and its six m.t. greenfield plant in Orissa.

“The project has got delayed due to land acquisition problems, but we hope to commission the first phase of the project with three m.t. capacity, by 2011. The ROIC from this plant will be better than Jamshedpur’s,” he said, adding that he expected to get the iron ore mining leases from the Orissa Government in the next few months.

The company was actively pursuing a policy to achieve raw material security within the next three to four years. It is involved in a coal project in Mozambique, which is said to have inferred reserves of 1.94 billion tonnes — production is expected to commence from this project in 2010.

Mr Muthuraman said the company was considering a restructuring of its group companies to unlock share value. Although he was unwilling to share more details on the proposal, he indicated that the restructuring would be at levels below Tata Steel, which had under itself a string of raw material projects under various stages of implementation.

On the outlook for the domestic steel market, he said India imported six million tonnes of steel last fiscal, which was expected to go up to eight to nine million tonnes this fiscal. “I do not see any significant fresh capacity coming up this year. Hence, steel companies will continue to do well (in the current fiscal),” he pointed out.