Financial Daily from THE HINDU group of publications
Thursday, Oct 27, 2005
Financial Daily from THE HINDU group of publications Thursday, Oct 27, 2005 |
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Steel Corporate - Performance Columns - Microscope Tisco: Other income props up growth Radhika Kamath
TATA Steel's report card for the second quarter reveals a modest performance. The post-tax earnings growth of 12.5 per cent was buoyed by other income that more than doubled to Rs 118.8 crore. Excluding other income, the growth rate was at a more modest 7 per cent. Earnings growth on a sequential basis is more respectable at 12.5 per cent, excluding other income. Operating margins have declined by about 0.90 percentage points compared to the first quarter. This is primarily on account of the price cut of about Rs 3,000/tonne made in July to match international prices. Raw material costs fell 5.2 per cent compared to the first quarter but it was overshadowed by a more than proportionate fall in final product prices leading to pressure on margins. Tata Steel's acquisition of 5 per cent stake in Australian coal mines in July is likely to enable the company to further reduce the input costs in future. Sales volumes in the steel segment have risen by 15.6 per cent in the quarter compared to the same period last year. However, the ferro-alloys division has been a dampener with earnings before tax falling by 39 per cent. The lacklustre performance of this division is likely to continue in the second half of the year on the back of slack demand for stainless steel. However, stable outlook for steel prices at its current levels and robust volume growth are likely to drive earnings growth in the next few quarters.
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