But year-on-year, the companys profit was down 44.18% in the quarter ended December 31, 2008, from Rs 1,311.76 crore in Q3, FY08. The results drove up Tata Steel shares 5.61% on the Bombay Stock Exchange. Shares ended the day at Rs 172.35.
Tata Steel posted profits on the back of strategic initiatives implemented in the quarter.
The market is not in great shape, the economy is down, demand is weak and these are unprecedented times. But Tata Steel was able to go ahead in this downturn as we have taken a lot of preventive actions in terms of continuous improvement and implementation, said B Muthuraman, managing director. We are geographically spread. We have a good product-mix and have some ownership of raw materials, he added.
The companys consolidated net sales for the quarter stood at Rs 33,191.01 crore, up 4.05% against Rs 31,898.54 crore in Q3 FY08. The tax writeback stood at Rs 40.53 crore against expenses of Rs 716.06 crore. Inventory writedown stood at Rs 1,744 crore. Its profit before tax declined to Rs 691.68 crore from Rs 2,027.82 crore. The company also made forex losses of Rs 200 crore in the third quarter.
Earnings in the quarter and the nine-month period would have been lower by Rs 4,256 crore and Rs 8,635 crore, respectively, had the company kept its practice of accounting gains & losses on pension funds in the profit & loss account. In line with IFRS principles, and permitted by AS21, Tata Steel accounted for the actuarial gains & losses at its European pension-fund investments from the reserves & surpluses on the balance sheet from April 1, 2008 onwards.
As a part of its group management initiatives, Tata Steel India plans to maximise sales to 1.5 million tonnes (mt) in the January-March quarter. We have already achieved 0.5 mt in January 2009. Our volumes in the current quarter will be 50% higher than the OctoberDecember 2008 quarter, said Muthuraman. The company is also renegotiating existing coal contracts for offtake till June 2009. Meanwhile, at Tata Steel Europe, the company is working on a programme to save 600 million pounds in H2 FY09.
Philippe Varin, CEO of Corus and Tata Steel Europe, said in a press conference, The Corus order book was down by 40% and we see the June quarter to be in line with the March quarter. Varin would step down on April 6 and Kirby Adams would take his place as Corus CEO.
Tata Steels net profit for nine months ended December 31, 2008 stood at Rs 9,350.47 crore against Rs 5,210.45 crore a year ago. Net sales were ar Rs 1,20,914.56 crore against Rs 95,485.74 crore from AprilDecember 2007. The companys deliveries for the nine months stood at 22.6 mt.
For FY2010 the group plans a capex of $1.2 billion, which will include Jamshedpur unit expansion to 10 mtpa by 2010 and developing existing investment in overseas raw material projects.
Meanwhile, Tata Steel has inducted its chief operating officer Hemant M Nerurkar to the board and made him executive director (India & Southeast Asia). Nerurkar is tipped to be the next managing director of the steel major after Muthuraman retires later this year.