Low margins,Rs 4,095 cr exceptional charge pull Tata Steel net down 60 pc

Lagging market expectations,steel giant Tata Steel posted a 60 per cent decline in consolidated net profit...

Lagging market expectations,steel giant Tata Steel posted a 60 per cent decline in consolidated net profit at Rs 4,951 crore for 2008-09 over the previous fiscal following sluggish market conditions and an exceptional charge of Rs 4,095 crore at its European operations. The worlds sixth largest steel maker had a net profit of Rs 12,350 crore in the fiscal ended March 31,2008. Total income rose by 12 per cent to Rs 1,47,329.26 crore in the fiscal ended March 2009,from Rs 131,533.63 crore in the previous fiscal.

In line with prudent accounting norms,the company has taken an exceptional charge of Rs 4,095 crore 805 million during the financial year 2008-09,representing restructuring,disposal and impairment costs undertaken at Tata Steel Europe. The net profit margin declined from 9.39 per cent to 3.36 per cent during 2008-09. The profit before taxes and exceptional items was Rs 10,838 crore during the year 2008-09 against Rs 10,036 crore in 2007-08.

The board has recommended a dividend of Rs 2 per share on cumulative convertible preference shares and Rs 16 per share on ordinary shares for the financial year 2008-09.

On a standalone basis,Tata Steel reported an 11 per cent growth in net profit at Rs 5,201.74 crore. It had a net profit of Rs 4,687.03 crore in the same period previous fiscal. Total income on standalone basis rose by 23.49 per cent to Rs 24,315.77 crore from Rs 19,691.03 crore in year-ago period.

Turnover at Corus increased by 9 per cent to Rs 109,570 crore 21,439 million and EBITDA decreased by 2 per cent to Rs 8,906 crore 1,751 million in financial year 2008-09 compared to financial year 2007-08.

During the financial year 2008-09,sales volume of the group was lower by 3.14 million tonnes compared to financial year 2007-08,reflecting sluggish market conditions in the second half of the financial year,especially in Europe where there has been a severe demand contraction.

Shares of Tata Steel closed at Rs 397.95 on BSE,down by 2.12 per cent over the previous close. Meanwhile,Tata Steel and Corus Staal BV has signed a memorandum of understanding with Tata Power Company for the construction of a 525 MW combined heat and power plant at Corus IJmuiden works in the Netherlands. Under this MoU,Tata Steel and Tata Power will set up a joint venture company to build,own and operate the power plant.