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– Shashi Ashiwal

Tackling crisis: (From left) Mr Koushik Chatterjee, CFO; Mr B. Muthuraman, Managing Director, Tata Steel Group; and Mr Kirby Adams, CEO, Corus, at a press conference to announce the company’s results in Mumbai on Thursday.

Our Bureau

Mumbai, June 25 Tata Steel has reported a 61 per cent drop in its consolidated net profit at Rs 4,849 crore for the year ended March 31, 2009, against Rs 12,322 crore registered in the same period last year mainly due to a sharp fall in demand in Europe and South Asia.

Mr B. Muthuraman, Managing Director, Tata Steel, said at a press conference here on Thursday that profit was affected by the unprecedented economic crisis globally in the second half of 2008.

“In Europe and the US, demand and production were down 40 per cent. Unlike in 2001-02 most steel companies avoided huge inventory by cutting down production,” he added.

Total income, including that of Corus, increased by 12 per cent to Rs 1,47,329 crore in FY’09 (Rs 1,31,534 crore). Had the company followed the practice of recognising changes in actuarial valuations of pension plans of Tata Steel Europe in the profit and loss account, the consolidated profit after taxes, minority interest and share of profit of associates would have been lower by Rs 5,497 crore.

In a bid to minimise the impact of demand contraction in Europe, Tata Steel UK has initiated consultation process to cut over 2,000 jobs.

“Some 1,500 job cuts will be in the company’s production facilities, 800 at the engineering steel sites mainly in Rotherham and Stocksbridge, 370 at Corus Tubes in the UK and the Netherlands and 375 at downstream rolling and finishing plants in Teesside and Scotland,” said Mr Kirby Adams, CEO, Tata Steel Europe (Corus).

The company is also opening consultations on 500 white collar jobs throughout the Corus Long Products division, the majority at Scunthorpe, he added. The board of directors has recommended a dividend of Rs 16 a share on ordinary shares for fiscal 2009 and a share on cumulative convertible preference shares.

Tata Steel has signed a share purchase agreement with its joint venture partner Ryerson Holding (India) Pte Ltd to acquire the entire equity interest of Ryerson in Tata Ryerson Ltd for $49 million.

Tata Ryerson is into the production of high quality cold rolled coil for manufacturers of household products. The company has a turnover of Rs 1,300 crore. Tata Steel has also signed a memorandum of understanding with Corus Staal BV for construction of a 525 MW combined heat and power plant at Corus’ Ijmuiden works in the Netherlands. It will be commissioned by 2013.

Under the debt restructuring negotiated with seven key lenders, the company has voluntarily agreed to prepay £200 million next fiscal. The funding will be raised by way of Tata Steel raising its stake in Tata Steel UK. The company has a net debt of $110 billion and the average cost of borrowing was eight per cent.

Tata Steel shares were down 2 per cent at Rs 398 on Thursday.

More Stories on : Steel | Financial Performance | Steel | Tata Steel Ltd

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