Steel has announced first quarter results, which are in
line with market expectations. The company managed excellent
top line growth but, like in most other sectors, margins
are under pressure. The company''s operating margins declined
on lower unit realisations and rising input costs.
net profits for the quarter ended 30th June 2006 increased
modestly by 3.44 per cent to Rs1,019.18 crore from Rs985.32
crore for the same quarter of previous year. Consolidated
sales revenues increased 17.99 per cent to Rs5,764.14
crore from Rs4,885.28 crore.
profits for the quarter increased marginally by 3.4 per
cent while operating margins declined considerably by
427 basis points. Operating margins as a percentage of
net sales fell to 30.21 per cent from 34.48 per cent.
were affected by a 33.28 per cent rise in cost of raw
material and other inputs over the previous year quarter.
Cost of power, freight and handling increased by 31.68
per cent during the quarter. Staff costs went up by 7.38
per cent and other operating expenses were higher by 16.62
costs increased by 29.1 per cent while depreciation charges
were higher by 25.19 per cent for the quarter. The bottom
line was supported by a 154 per cent rise in other income
to Rs79.14 crore from Rs31.17 crore for the prior year
Steel, excluding subsidiaries and overseas associates,
produced 1.11 million tonnes of steel during the quarter
an increase of 16.97 per cent. Steel sales increased
an impressive 27.85 per cent for the quarter. Exports
for the quarter went up by 11.97 per cent.
the business segments, steel sustained the performance
while ferro alloys disappointed. Steel sales revenues
increased 17.51 per cent while sales of ferro alloys declined
6.92 per cent. Profitability of the ferro alloys and minerals
division also declined, though the contribution of the
business to overall profits is low.
results also include the financial performance of all
the overseas subsidiaries of Tata Steel, including Natsteel.
During the quarter, Millennium Steel of Thailand and its
subsidiaries became subsidiaries of the company.