Riding on rising steel prices and sales, the world's sixth-largest steel firm, Tata Steel reported 41 per cent jump in its net profit for the quarter ended March 2007 at Rs 1,104 crore (Rs 11.04 billion) on sales of Rs 4,980 crore (Rs 49.8 billion).
Tata Steel managing director B Muthuraman attributed the record rise in profits to robust steel prices across the industry. "This was an outstanding year for us as our consolidated net profit crossed $1 billion for the first time, thus making us the sixth largest steel company in the world," Muthuraman said.
While Tata Steel's consolidated net profit was Rs 4,165 crore (Rs 41.65 billion) for FY'07, its total consolidated revenues crossed Rs 27,437 crore (Rs 274.37 billion), including the revenues of the overseas subsidiaries such as Millennium Steel and NatSteel.
The Tata firm said it would pay a dividend of 130 per cent a share and a special payout of 25 per cent a share on the occasion of its centenary year.
The company, which took over British steel firm Corus Group for $12.9 billion in February this year, will have its $1,888 million (approximately Rs 7,740 crore) rights issue "in the next three months" and plans an international share sale worth $445 million (approximately Rs 1,824 crore) before the end of the current financial year to finance the Corus acquisition. The Corus deal lifted Tata Steel from 56th to 6th position in the global steel rankings. Muthuraman is now targeting the world number 2 slot by 2015.
Tata Steel also admitted that it has raised the prices by seven to eight per cent for its distributors-led customers from this month. The prices for its contract customers remains the same, Muthuraman clarified. Corus raised its prices by 6 to 7 per cent since the Tatas took over the company.
On the Corus financing, Tata Steel's Vice President (Finance) Kaushik Chatterjee said the company managed to re-finance the acquisition for Rs 26,873 crore(Rs 268.73 billion) and brought down the average cost of debts from Libor (London interbank offered rate) plus 3.72 per cent to Libor plus 1.92 per cent thus saving $100 million for the company.
According to plans, the Tatas will contribute $4.1 billion and banks will arrange $6.14 billion in debt and provide $2.66 billion as a bridge loan to fund the Corus purchase.
Muthuraman said the company is still looking for acquisition opportunities abroad and had visited Egypt for discussions in this regard. The company has not made any firm plans for the north African country as yet, he clarified.
Tata Steel's shares closed 1.51 per cent up at Rs 597.35 on a bullish Bombay Stock Exchange on Thursday. The company's share prices have rebounded by 46 per cent since it announced the Corus takeover.