Tata Steel Q2 profit plunges 93%

Company's profit plunges to Rs 139 crore due to higher raw material cost.

Tata Steel’s consolidated net profit for the second quarter of the current financial year plunged by 93% to R139 crore due to higher raw material cost.

The company,which is the world’s seventh largest steelmaker,had clocked a profit of R1,968 crore in the corresponding quarter in the last financial year,Tata Steel said in a filing to the Bombay Stock Exchange.

Tata Steel’s net sales rose to R32,507 crore during the July-September quarter,16% higher than R28,091 crore in the year-ago period. The total expenditure of the company also went up to R31,157 crore during the quarter against R26,052 crore in the year ago.

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The company consumed raw material worth R10,832 crore during the quarter under review against R9,409 crore in the same period last year. Freight cost went up by over R200 crore at R1,685 crore. Tax outgo was higher at R907 crore vis-a-vis R745 crore previously.

On the other hand,”other income” of the company was down to R120 crore compared to R814 crore in the July-September quarter of the financial year.

Steel prices fell by $30 a tonne on average in Europe during the period, chief financial officer Koushik Chatterjee said on the sidelines of an earnings press conference.

“The impact in Europe has all been because of higher raw material prices, Chatterjee added. Tata Steel does not have secure long-term supplies of raw material for its European operations.

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A Reuters poll of 11 brokerages had forecast quarterly net profit of R980 crore. The $500 billion global steel industry is facing an uncertain outlook,with European firms announcing production cuts in the face of waning demand,while steelmakers in Asia have had to trim investment plans.

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