Tata Steel quarterly profit halves in India
New Delhi, Jan 29: In view of the continuously slumping sales to half of quarterly profits of the Indian operations of Tata Steel, top officials said that a recovery was only expected in the second half of 2009.
Steelmakers have struggled to keep up the sales, as a global credit crisis has hit the demand of major steel-consuming industries producing automotives, consumer goods and construction material. Global steel production has tumbled by 24 percent in the last quarter of 2008.
In
a
bid
to
battle
the
downturn,
Europe's
second
biggest
steel
maker
Corus,
is
likely
to
cut
jobs
in
Britain
and
worldwide.
Referring
to
European
sales
at
a
news
conference,
Chief
Executive
of
Tata
Steel's
Anglo-Dutch
unit
Corus,
Philippe
Varin
said,
"In
this
context,
our
order
book
is
down
by
more
than
30
per
cent
which
is
not
surprising
and
probably
you
would
have
seen
the
prices
are
now
at
50
per
cent
of
what
they
were
in
September
2008."
Net profit from the company's previous year's Indian operations account for about a fifth of its total output, and fell by 56.4 percent from 10.7 billion rupees to 4.66 billion rupees ($95.5 million), in its fiscal third quarter.
Managing Director B Muthuraman had expected better sales volume and stable prices in the March quarter. Revealing Tata Steel's current position, Muthuraman said that his company continues to be weak this year and is not as strong as it was three months, six months or even a year back. However, he saw a positive change since the Oct Nov-Dec quarter.
Muthuraman revealed that the company was badly affected by the high cost of coal. Tata Steel imports 40 percent of its requirements. Earlier this month, Tata Steel said that the December quarter steel sales from its Indian operations fell by 14 percent from a year earlier to 1.07 million tonnes.
1.27 billion rupees were hit in the December quarter earnings as per the notional foreign exchange losses with sharply higher raw material costs and slowing sales. Shares in Tata Steel, valued at about $2.6 billion, shed nearly half their value in the December quarter, compared with a 25 percent fall in the benchmark index.
On Tuesday, Jan 27 Steel Authority of India Ltd., India's largest domestic steel producer, also posted a 56 percent drop in quarterly profit.
ANI