India's steel firms show robust Q3 growth

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

31 Jan 2010

As expected all the base metal mining companies across the world are performing well in Q3 which resulted in their profits soaring to new highs.
This week, Tata Steel has come out with its Q3 results and claimed that its earnings for the period ended December 2009 more than doubled on the back of strong volumes and a slump in raw material prices.
Net profit increased 156% to Rs 1,192 crore during the third quarter of 2009-10 from Rs 466 crore in the corresponding period a year ago. The company’s steel sales grew 49% to 16 lakh tonnes during the December quarter, which helped its total income from operations grow by 33% to Rs 6,375 crore during the period under review compared to Rs 4,810 crore a year ago. Growth in steel sales was aided by the improvement in demand from construction and automobile industry.
Consumption of raw materials came down from Rs 1,610 crore to Rs 1,422 crore, primarily because of low iron ore prices. Iron ore is one of the key raw materials for the company. Profitability was also aided by a rise in other income of Rs 264 crore. Its other income during the December quarter of FY09 stood at Rs 12 crore. On the other hand, exports increased from Rs 392 crore to Rs 626 crore.
India’s other major steel producer SAIL also had a great December quarter. A robust steel demand in the domestic market, coupled with a lower raw material cost, worked
well for both the companies.
Majority of the top steel producers have reported a sales volume growth of 25-80% in Q3. Sales volume of SAIL and Tata Steel grew by nearly one-fourth and one-half, respectively.
Most of the companies have raised their product prices by Rs 1,000-2,000 per tonne in the past one month. With continuous rise in global steel prices, domestic prices would have to move further upwards. Due to a falling raw material cost, the bottomline of these two companies grew at a much faster rate during the quarter.
The average cost of this key raw material was 40-50% lower compared to the same period last year.

Source: Commodity Online