— Photo: Vivek Bendre

PRESSURE ON MARGIN: T. Mukherjee, Deputy Managing Director, Tata Steel, at a press conference in Mumbai on Thursday.

MUMBAI: Tata Steel, in spite of a sharp rise in input costs, has reported an improved net profit of Rs. 3,721 crore during 2005-06 against Rs. 3,571 crore in the previous year. The board of directors has recommended a dividend of 130 per cent for the year.

The company's sales were up at Rs. 22,272 crore (Rs. 17,414 crore). The operating profit was up at Rs. 6,338 crore (Rs. 6,201 crore). During the year, the company produced 4.56 million tonnes (4.11 million tonnes) of steel and sold 4.42 million tonnes (3.94 million tonnes). The consolidated results include the working of NatSteel in Singapore.

Millennium Steel of Thailand has become an associate with effect from March 22, following the acquisition of 25 per cent equity stake in it by Tata Steel for Rs. 280 crore.

"In spite of higher input costs, the company controlled costs, improved product mix and increased production of hot metal by five lakh tonnes during the year. Costs were brought down by using less sponge iron and pig iron and we were able to produce half a million tonne more steel than the previous year. Net profit margins were lower at 18 per cent (22 per cent), being hit by high input costs,'' T. Mukherjee, Deputy Managing Director, Tata Steel, said while addressing the media here on Thursday.

During 2005-06, Tata Steel's capital expenditure was Rs. 1,400 crore and in the current year, it was likely to be around Rs. 2,000 crore, given the expenditure being incurred on the 1.8-million-tonne capacity expansion at Jamshedpur.

While last year, the company had raised $975 million, this year; it had appointed a committee to study the company's capital requirements and the mode and means of raising funds, Mr. Mukherjee said.

During the year, iron ore prices went up by 71 per cent, hard coking coal by 119 per cent and zinc by 43 per cent.

The company also reduced its usage of imported coal to 32 per cent (46 per cent in 2004-05) of total usage, which was significant considering that a third of the cost of production of steel was accounted for by coking coal.

Also, in line with its strategy of owning key raw material sources, in 2005-06, the company met 25 per cent of the limestone requirements from a joint venture, and in the current year, this was likely to meet half of its requirements, he said.

The company was looking to lower costs in the current year.

Its 1.8-million-tonne expansion at Jamshedpur was on schedule and should come on stream by end 2008, Mr. Mukherjee said.

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