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Rise in Tata Steel net an added bonus

Mumbai, May 20: Shareholders of Tata Iron and Steel have plenty of reasons to cheer about. The company has notched up a record profit and the steel major today announced that it would meet on June 7 to consider a bonus issue. Tata Steel also declared a record dividend of 100 per cent for 2003-04.

Buoyed by strong steel prices, a healthy product mix and lower interest costs, the company reported a 34 per cent rise in net profit at Rs 628.88 crore for the fourth quarter ended March 31, 2004 compared with Rs 469.08 crore in the corresponding previous quarter.

Net profit for the year 2003-04 stood at Rs 1,746.22 crore compared with Rs 1,012.31 crore in the preceding year.

Tata Steel was the top traded scrip on Dalal Street today with a turnover of Rs 326.24 crore. The share closed at Rs 320.55, up from Wednesday’s close of Rs 315.10.

Apart from a strong bottomline, the company’s topline also recorded a substantial growth in the reporting quarter. Net sales increased to Rs 3,200.27 crore against Rs 2,664.76 crore in the year-ago period.

Last fiscal, net sales crossed the Rs 10,000-crore mark and touched Rs 10,702.39 crore compared with Rs 8,721.32 crore in the previous fiscal.

Speaking to newspersons here today, managing director B. Muthuraman said apart from producing steel at a very low cost, the company also aims to be a global entity by producing steel “somewhere else”.

Tata Steel is currently looking at fresh capacities for acquisitions both in India and abroad to emerge as a global entity. It is also planning to expand the steel capacity by 1 million tonnes at Jamshedpur to over 5.5 million tonnes. The expansion plan, likely to be completed by September 2005, is expected to cost Rs 2, 000 crore.

This cost is far more economical as a project of similar capacity would normally cost Rs 4,000-4,500 crore, Muthuraman said. In the subsequent phase, the company plans to further jack up steel capacity by 2.4 million tonnes.

Apart from having a strong product mix, Tata Steel has also been focussing on branded steel. Sales of branded steel products, which shot up to Rs 2,363 crore in 2003-04 from Rs 836 crore in 2000-01, is expected to touch Rs 3,000 crore this financial year.

The company is also making efforts to plug any gaps in the supply of raw materials. The company has a limestone project in Thailand and the board has approved a coke project at Haldia. Moreover, Tata Steel and Larsen & Toubro are also planning to build a port at Dhamra in Orissa. The estimated cost of this project in the first phase is Rs 1,500 crore.

Muthuraman, who is optimistic about the company’s performance this fiscal, said that demand for the commodity is strong from the automobile and construction sectors.

In 2002-03, the interest costs of the company has come down to Rs 122.17 crore. Tata Steel repaid high-cost loans of Rs 852 crore.

While steel production for 2003-04 stood at 40.55 lakh tonnes (39.75 lakh tonnes), Tata Steel sold 39.58 lakh tonnes (39.04 lakh tonnes). In revenue terms, the steel business generated Rs 9,875.81 crore last fiscal against Rs 8,115 crore in 2002-03.

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