| Gateway to a hike
Mumbai, Dec. 26: Steel prices seem to be bouncing back after hitting a trough, with leading steel makers raising product prices. Tata Iron and Steel Company Ltd (Tisco) today indicated that it is considering an upward revision early next month in flat products.
“We wish to convey that with prices for flat products in the domestic and international markets firming up, we are considering increasing prices with effect from January 1, 2003,” Tisco informed the stock exchanges today.
The company added that a suitable announcement would be made in due course of time once it finalises the price hikes. The announcement saw the Tisco share finish higher by Rs 2.45 at Rs 147.25 on the BSE today.
Though company officials were not willing to comment on the extent of the price increase, industry circles indicated that any move by Tisco will be mirrored by other steel majors. A senior official from one of the other leading steel companies here added that with international prices “looking up,” some correction on the domestic front can be expected in the days to come.
Earlier this year, domestic steel majors were successful in pushing through four rounds of price hikes following a firm international trend. Subsequently, hot rolled coils (HRC) prices shot up by close to Rs 4,500 per tonne to around Rs 16,000 per tonne. International HRC prices were then at around $ 320 per tonne.
However, despite these hikes, a fifth upsurge could not be consummated as prices of the commodity stabilised in international markets. Though a couple of domestic firms made a few attempts to subsequently infuse an upward correction, they could not materialise.
Sources added that any hikes in January next year could improve the balance sheet of domestic steel majors for the year ended March 31, 2003. For the second quarter of the current fiscal ending September 30, Tisco posted a net profit of Rs 203.18 crore compared with a net profit of Rs 27.36 crore in the quarter ended September 30, 2001.
Total income (net of excise) of the company increased from Rs 1,728.49 crore in the September 2001 quarter to Rs 1,985.39 crore in the quarter ended September 30, 2002.
Tisco, which has been focussing on a massive cost-cutting exercise to improve its bottomline, has laid out a plan of being on the lookout for opportunities to remain ahead of competition. This, it said, could exist in emerging technologies, new business models, value creation, customer service, new products and services or businesses.
As per its Vision 2007 plan, the company is looking to enter at least one major new business that would have grown comparable in size to the core business. Tisco also announced plans to continuously evaluate and expand the new businesses to compliment the cyclical nature of the steel business.