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Our Bureau

Mumbai Oct. 26 Tata Steel, India’s biggest steel producer in the private sector, reported a modest 8.2 per cent increase in its net profit for the quarter ended September 30, 2007, on the back of a stagnant operating profit margin.

Its profit during the quarter was Rs 1,190.83 crore, as against Rs 1,101.49 crore in the corresponding quarter of last fiscal.

This was despite a surge in interest costs on account of the acquisition of European steelmaker Corus earlier this year for $12.9 billion. However, foreign exchange gains partly offset the interest costs. It made a gain of Rs 90.31 crore during the quarter on account of unrealised exchange difference on foreign currency borrowings. The company’s results do not include Corus figures.

During the quarter, Tata Steel’s interest costs touched Rs 202.15 crore (Rs 47.77 crore). This was reflected in the company’s net profit margin, which came down to 24.8 per cent during the quarter (26.3 per cent).

Although Tata Steel’s results beat market estimates, analysts fear that interest costs will continue to bruise profit margins in the coming quarters.

Net sales touched Rs 4,785 crore during the quarter, as compared to Rs 4,185 crore in the year ago quarter, representing a nearly 14 per cent rise.

Its total expenditure increased to Rs 2,725 crore (Rs 2,480 crore).

The company consumed raw materials worth Rs 799.86 crore (Rs 732.63 crore). Steel production at 1.2 million tonnes was flat compared to the year ago quarter. Exports however were up at $146 million ($116.99 million).

Tata Steel shares climbed 0.17 per cent to end at Rs 990.60 on Friday.

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

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