$1.2 billion capital expenditure planned for 2009-10
MUMBAI: Tata Steel has reported a 40-per cent drop in its consolidated net profit at Rs. 732.21 crore for the quarter ended December 31, 2008, as compared to Rs. 1,311.76 crore for the same quarter in the previous year . Total income for the reference period increased by four per cent to Rs. 33,222.59 crore (Rs. 32,074.34 crore). The consolidated results include the Indian operations and that of Tata Steel Europe, Singapore and Thailand.
The company’s earnings took a hit because of inventory write-downs at some units, a foreign exchange loss and a tax write-back. Also, according to a company statement, the actuarial gains and losses on funds for employee benefits (pension plans) of Tata Steel Europe (Corus) for the period from April 01, 2008 have been accounted in ‘Reserves and Surplus’ in the consolidated financial statements in accordance with IFRS principles and permitted by AS21. This treatment is consistent with the accounting principles followed by Tata Steel Europe and earlier by Corus Group under IFRS. Tata Steel Managing Director B. Muthuraman said, “the market is not in great shape but in these unprecedented times, the company has shown resilience. The resilience is based on the fact that we were well prepared and had undertaken pre-emptive actions and implemented them. We also have a geographical spread of our operations and so have areas of less weak demand than other areas and have a good product mix. Besides, we also have some ownership of our raw materials.”
The company has set a capital expenditure plan of $1.2 billion for 2009-10, of which around 40 per cent is for the expansion of the Jamshedpur facility from three million tonnes to ten million tonnes by 2010. Tata Steel Europe (erstwhile Corus) CEO Philippe Varin was quite pessimistic about the immediate prospects in Europe.