The Hindu Business Line : Tata Steel Q4 net dips 13 pc

Tata Steel Ltd has reported a 4.2 per cent rise in consolidated net profit for 2005-06 at Rs 3,721.07 crore from the previous corresponding Rs 3,571.2 crore. Net sales/ income from operations was up 26.54 per cent at Rs 20,244.43 crore (Rs 15,998.61 crore for the year-ago period).

The steel company reported a 13.23 per cent decline in its fourth quarter consolidated net profit at Rs 799.41 crore (Rs 921.31 crore).

Profits were impacted because of rising input costs against falling steel prices despite 19.83 per cent increase in net sales/income from operations to Rs 5,551.35 crore (Rs 4,632.72 crore). On standalone basis, Tata Steel returned 0.93 per cent rise in FY06 net profit to Rs 3,506.38 crore (Rs 3,474.16 crore) on 4.42 per cent gain in net sales/ income from operations to Rs 15,139.39 crore (Rs 14,498.95 crore) and for Q4, 13.81 per cent dip in net profit to Rs 783.11 crore (Rs 908.58 crore) on 6.84 per cent rise in net sales/income from operations to Rs 4,128.97 crore (Rs 3,864.65 crore). The board has recommended dividend of 130 per cent.

Lower margin

Dr T. Mukherjee, Deputy Managing Director (Steel), told a press briefing that FY06 net margin per tonne of steel had been lower courtesy declining steel prices and rising raw material prices. Right product mix and higher volumes helped maintain overall profit.

Tata Steel's EBITDA margin dipped at consolidated level to 32 per cent (39 per cent) and at standalone level, to 40 per cent (42 per cent). "It will take another two years to make Nat Steel like Tata Steel," he said on improvements at subsidiaries.

Global steel consumption is forecast to grow 7.3 per cent to 1.087 billion tonnes in 2006, with Chinese growth at 13 per cent and that country accounting for 32 per cent of overall demand.

Demand growth in India was estimated at 8 per cent. Shares of Tata Steel fell by Rs 66.80 or 10.91 per cent to Rs 545.45 on BSE.

Tata Steel's priorities for FY07 include raising volumes by half a million tonnes, lowering production cost, improving product mix, improved integration of Nat Steel and Millennium Steel with itself.

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