Tata Steel consolidated net dips 61%

Written by Corporate Bureau | Mumbai | Updated: Jun 26 2009, 06:30am hrs
Lagging market expectations, Tata Steel Ltd, the worlds sixth largest steel manufacturer, on Thursday reported a 61% dip in its consolidated net profit at Rs 4,849.24 crore for the year ended March 31, 2009 against Rs 12,349.90 crore a in the previous year. The company's consolidated net sales were up 12% at Rs 1,47,329.26 crore against the previous year's Rs 131,533.63 crore.

However, on a standalone basis (ie only the India operations), the company reported an 11% growth in net profit at Rs 5,201.74 crore, while its total income was up 23.49% at Rs 24,315.77 crore.

The company declared a dividend of 160%, at the rate of Rs 16 an equity share, besides Rs 2 a piece on every Rs 100 convertible preference share for the year ended March 31, 2009.

The company said it has embarked on a massive cost-savings initiative in its European operations, which could include steep job cuts.

Since these initiatives were announced in January, some European operations have continued to experience deteriorating market conditions. As a result, Corus is today announcing additional measures to align production and manning levels in those areas with existing and anticipated demand levels, a company statement said.

The company has identified that around 2,045 jobs could be at risk. Some 1,500 of these are in its production facilities: about 800 at the engineering steels sites, mainly at Rotherham and Stocksbridge; about 370 in Corus Tubes in the UK and the Netherlands, and about 375 at downstream rolling and finishing plants in Teesside and Scotland. The company is also opening consultations on 500 white-collar jobs throughout the Corus Long Products division, mostly at Scunthorpe.

On the backdrop of an increase in the domestic demand for steel, Tata Steel had last week increased prices of its flat steel by Rs 500-750 per tonne effective June 2009.

Finished steel production at Tata Steel India for financial year 2008-09 stood at 5.37 million tonnes, 11% higher than the previous year.

During the current quarter of financial year 2009-10, Tata Steel has raised long-term debt of around $1,040 million through a mix of term loans and non-convertible rupee debentures. These have a tenor of five-and-a-half years to ten years and the company intends to deploy the proceeds for its various expansion plans and general corporate purposes.

The Tata Steel Group continues to have strong liquidity and has no material repayment obligations or refinancing requirements in the next 12 months. As on June 20, 2009 Tata Steel Groups cash and cash equivalent stood at about $ 2.1 billion and the group had an undrawn bank facility of about $1.3 billion, the management reiterated.

Asked about the status of the Teesside plant and Kirby Adams, the CEO of Tata Steel Europe said the company is in talks with potential buyers, including those four who cancelled the contracts. Under the 2004 agreement, the consortiumcomprising Marcegaglia of Italy, Dongkuk of South Korea, Brazils Duferco and Alvory, a subsidiary of Latin American steelmaker Ternium ere to buy under 78% of the plants production for 10 years, underpinning its future. However, they have not reached any conclusions at the moment, he added.