February 17 2020
Tata Steel first quarter profit triples to Rs.5,347 crore
12 August 2011

Tata Steel on Friday reported a trebling of its consolidated net profit for the first quarter of 2011-12 ended June 30, 2011, at Rs.5,346.55 crore against Rs.1,825 crore in the previous year mainly on account of a one-time profit after the company's stake sales in the Australian mining firm Riversdale and in Tata Refractories.

The company's consolidated net sales grew 21.6 per cent to Rs.32,839 crore from Rs.27,010 crore on the back of stronger volumes in India and improved prices in Europe. The operating profit was Rs.8,358 crore (Rs.4,506 crore) but this included a one-time gain of Rs.4,007 crore. The company realised Rs.4,942 crore by selling its 26.27 per cent holding in Riversdale to Rio Tinto. Out of this amount, Tata Steel included Rs.2,879.30 crore as a one time profit in its results. Besides this, it made a profit of Rs.511 crore by selling its 51 per cent stake in Tata Refractories to Krosaki Harima Corp, an associate of Nippon Steel of Japan.

During the quarter, the company's raw material costs increased by 44 per cent to Rs.11,227.73 crore as it paid more for iron ore and coking coal for its European business which is entirely dependent on external sources for raw materials. Net debt at the end of June 2011 of Rs.40,824 crore was lower than Rs.46,627 crore at end March 2011.

On a standalone basis, the company reported a net profit of Rs.2,219.43 crore, registering a growth of 40.52 per cent during the quarter (Rs.1,579.39 crore). Turnover rose by 20 per cent to Rs.7,860 crore (Rs.6,551 crore). The operating profit was up 23.3 per cent at Rs.3,656 crore (Rs.2,965 crore) despite softening steel prices.

The underlying operating margin, excluding one-off gains, was 40 per cent, up 3.3 points.

Salable steel production rose by 10 per cent to 1.75 million tonnes and sales volume was up 14 per cent to 1.59 million tonnes.

Tata Steel Europe MD & CEO Karl-Ulrich Kohler said: “Tata Steel followed up the exceptional March quarter by delivering an encouraging performance in April-June, even though the weakening of the European steel market, which affected our deliveries, was made worse by rising imports. European steelmakers also faced the challenge of sharp raw material cost increases, which have largely been maintained into this quarter, despite the uncertain economic outlook. We continued to work on our strategy of strengthening customer relationships and cost leadership, including initiating a process that is designed to turnaround the performance of our long products business and return it in to profitability”.

Tata Steel Managing Director H. M. Nerurkar said, “Volumes and earnings from the Indian operations were robust despite signs of slower growth in India. Deliveries in first quarter rose 14 per cent over the previous year on the back of successful marketing and collaboration with key customers on product development. We are continuing to consolidate the gains recorded in recent quarters through our company-wide continuous improvement programmes, though high raw material prices and monetary tightening in India remain cause for concern. Our next expansion phase at Jamshedpur will start coming on stream in the last quarter of this financial year and the Orissa greenfield project is progressing well, with the first 3 million tonnes per annum phase due for commissioning in 2014”.



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