The jump of 155% in the net profit is seen to be largely driven by higher volumes while the operating profit margins were flat at 34% levels. The sales volume has jumped by roughly 49% in the December 2009 quarter over the same period of the previous year. Some analysts point out that the 214% jump in the other income has caused the profits to swell. Other incomes for the December 2009 quarter were at Rs 263.56 crore or 15% of the profit before taxation.
However, there are others who reckon that the amount is not significant and the company has actually delivered on performance as the raw material cost for the company came down from Rs 13,041 per tonne of steel produced to Rs 8,427 per tonne.
And overall raw material costs were down by 11%, especially at a time when volumes were exceptionally high. It also managed to grow its realisations by 2% for flat products in the December 2009 quarter over the previous quarter, and this was the real surprise element. Moreover a one-time expense of Rs 185 crore was also incurred as the company restructured its debt obligations through the convertible alternate reference securities (CAR). And this quite negates the other income growth.
The company also saw a 14% rise in the wage bill in the December 2009 quarter on an annual basis. Overall, the concern for analysts at the moment is that of the Corus operations. And here as well the company has announced that the Corus units long products operation will raise prices by at least 60 pounds a tonne. With prices expected to remain stable in Europe and capacity expansion plans coming on stream in the next year, the company will be closely watched.