Despite softening steel prices, spiralling raw materials cost
Tata Steel'sboard has approved the acquisition at 455 pence per share
Acquisition wouldbe financed through equity contribution by Tata Steel and through non-recourse debt on Tata Steel UK
Mumbai, Oct. 30
Despite softening steel prices and spiralling cost of raw materials, Tata Steel has reported a net profit of Rs 1,101.49 crore during the second quarter ended September 30 against Rs 1,045.42 crore in the same quarter of last fiscal, representing a 5.3 per cent increase.
Income from operations moved up to Rs 4,185.75 crore (after excise duty) from Rs 3,884.42 crore, up by 7.7 per cent. Steel production touched 12.57 lakh tonnes while export turnover dipped to Rs 545.95 crore from Rs 629.33 crore. On a consolidated basis, the company's net profit and income were Rs 1,137.51 crore and Rs 6,008.28 crore respectively as against Rs 1,112.60 crore and Rs 5,631.67 crore.
Talking to presspersons, Mr B. Muthuraman, Managing Director of Tata Steel, said the company expected to produce an additional 0.5 million tonnes of steel this fiscal. He expected steel prices to remain at the current levels for the remaining part of the year.
On Tata's acquisition of Corus Group, he said the company's board had approved the proposed acquisition of the entire share capital of Corus at 455 pence per share in cash, valuing 100 per cent equity of Corus at Rs 37,286 crore. The proposed acquisition would be financed through equity contribution by Tata Steel at about $3.5 billion (Rs 15,862 crore) and the balance through non-recourse debt on Tata Steel UK to be serviced by cash flows from Corus. He expected the transaction to close by the middle of January 2007.
According to him, the acquisition would deliver significant synergies.
Tata Steel's expansion projects in India and abroad, with the objective of producing more than 30 million tones of steel by 2015, were on schedule. They included expansion of the Jamshedpur plant by 1.8 million tonnes, Haldia coke project to be commissioned by end-2007, Kalinganagar steel plant in Orissa and Dhamra Port project in Orissa.
Mr Muthuraman said India's demand for steel was expected to grow 10 per cent in 2006 and 2007. In the long term, he expected steel prices to hover at $450 per tonne.
Tata Steel shares closed at Rs 498.35 down by Rs 2.5 on the BSE on Monday.Related Stories:
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