Tata Metaliks Ltd, a subsidiary of Tata Steel, posted a 63 per cent growth in net profit at ₹75 crore for the quarter ended December 31, 2020, as against ₹46 crore same period last year.
Revenue from operations grew by just about one per cent to ₹526 crore from ₹519 crore same period last year.
The company’s pig iron division recorded highest quarterly deliveries in last five years, which was higher by nearly four per cent and three per cent, compared to Q2 FY’21 and Q3 FY’20, respectively.
This was possible due to strong market demand post reopening and ramping up of operations in all major foundry clusters with 80-90 per cent utilisation levels. The strong business results have been supported by stable blast furnace operations, raw materials optimisation, higher coal injection and oxygen enrichment, the company said in a press statement.
Ductile iron (DI) pipe deliveries were, however, lower by around 12 per cent and 19 per cent compared to Q2 FY’21 and Q3 FY’20, respectively. Post-Covid, the DI pipe industry has been under stress due to slowdown of executable projects and limited release of government funds towards water infrastructure projects. However, signs of recovery are visible with deliveries picking up by the end of the quarter with December’20 recording the highest monthly DI pipe sales in the current fiscal for TML.
The quarter saw steep rise in domestic iron ore prices by nearly 80-110 per cent mainly due to uncertainty in resumption of merchant mines in Odisha post mines auction last year. Market price of domestic coke also saw an increase of 10-15 per cent on a quarter-on-quarter basis.
Despite the hefty increase in price of major raw materials, the company could achieve an operating margin of around 24 per cent compared to close to 22 per cent in Q2 FY’21 owing to strong operational performance and steep rise in Pig Iron prices, the release said.
“Strong focus on operational performance coupled with a buoyant market for Pig Iron has contributed to the high margins. Pig iron demand is expected to remain healthy in Q4 FY’21 but the spreads may get impacted on account of the continuing hike in raw material prices. Though DI Pipe business has been subdued this year due to impact of Covid, the outlook is quite encouraging for Q4 and beyond with good pick-up in demand and several new water projects on the anvil. The DI Pipe expansion project which was moving slowly due to Covid, has been put on fast track for completion within the next financial year,” Sandeep Kumar, Managing Director, Tata Metaliks, said in the release.