JOIN USThe company had posted net profit of Rs 1,787.81 crore in corresponding quarter last fiscal.
The 49 per cent dip in net profit was due to fall in steel prices, Tata Steel’s Group Chief Financial Officer Koushik Chatterjee said that, and as a result, realisation came down to Rs 29,900 a tonne in Q2 from Rs 40,000 a year-ago.
The sharp dip in prices of ferro-alloys, about Rs 60,000 a tonne in September this year over the same month last year, has also dug a Rs 500 crore hole in the company’s bottomline, he said. Its ferro-alloys are now priced in the range of Rs 30,000-40,000 per tonne.
Chatterjee hoped that the realisation would remain at the current level of Rs 30,000 a tonne in the remaining quarters of the current fiscal, as cost of coal has softened. Its total income also declined by 18.23 per cent to Rs 5,768.16 crore during the period under review.
Tata Steel MD Hemant Nerurkar expects that the steel prices would remain at the current level and the company would be able to sell more steel in the second half of the year than the first on improving demand scenario.
Improvement in price
JSW Steel Vice-Chairman and Managing Director Sajjan Jindal had recently said the recent $ 50 per tonne price reduction in China could have a softening effect on Indian steel market, though the current level of $ 550 per tonne price looked sustainable.
Steel prices in the country are recovering from more than 50 per cent correction in rates after peaking in September last year. At present various steel products are priced in the range of Rs 30,000 to 47,000 a tonne.
Tata Steel’s standalone EBIDTA margin dipped to 35 per cent in Q2 FY’10 as compared to 50 per cent a year ago period, but improved when compared to 32 per cent margin in the first quarter of the this fiscal.
Tata Steel’s net debt, as on September-end, 2009, was at Rs 24,236 crore while it has a liquidity of Rs 6,110 crore, down from Rs 7,320 crore at the end of the June quarter.
The company’s consolidated results, which could be out by the end of next month, is likely to be better than the previous quarter of the current fiscal as capacity utilisation at its European operations in the first half improved to 66 per cent from 53-54 per cent in the first quarter.
“Capacity utilisation across Europe was in the range of 50 per cent in the first quarter and ours was 53-54 per cent. In the first half, our capacity utilisation was 66 per cent,” Tata Steel Europe’s Managing Director Kirby Adams said.