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Tisco's H1 net profit dips 6.5 pc to Rs 654 million

The Tata Iron and Steel Company has reported sales growth of 11.3 per cent year on year and a 6.4 per cent dip in net profit for the first half of 1999-2000.

The downtrend of the last three years has finally been checked.

Tisco's net sales during the second quarter ended September 30, 1999 increased by 16.56 per cent to Rs 17.07 billion from Rs 14.64 billion in the same quarter previous fiscal.

Net profit, however, came down to Rs 653.9 million from Rs 692.3 million last year, mainly on account of higher provision for depreciation and taxation.

Gross profit remained unchanged at Rs 2.11 billion while interest payment increased by almost Rs 200 million to Rs 880.4 million from Rs 685 million in the second quarter of 1998-99.

Company's other income also declined sharply to Rs 243.9 million from Rs 485.1 million.

Tisco has also obtained final approvals for the sale of its cement division to Lafarge India Private Limited during this month.

Official sources today said with the receipt of final approval, the sale transaction is expected to be completed during the third quarter of 1999-2000.

The sharp decline in net profit was mainly on account of higher provision for depreciation of Rs 2.10 billion against Rs 1.84 billion in the first six months of previous year, sources said.

In the second quarter alone, the provision for depreciation was higher by Rs 130 million at Rs 1.06 billion from Rs 930 million last year.

Total expenditure during the half year increased to Rs 31.34 billion from Rs 28.17 billion and operating profit increased to Rs 5.11 billion from Rs 4.58 billion last year.

Although the interest payment increased to Rs 1.73 billion from Rs 1.46 billion in the first six months of previous year, company's gross profit remained higher at Rs 3.75 billion against Rs 3.70 billion last year.

Payment on account of employee separation compensation during the period amounted to Rs 645.3 million (Rs 780.8 million) while provision for taxation remained more or less stable at Rs 110 million (Rs 118.6 million).

Operating margins, inclusive of expenditure related to the early separation scheme has increased from 13.5 per cent in the first half of 1998-99 to 14.2 per cent in the first half of 1999-2000.

However, higher exports and better export realisations are expected to provide succour to the beleaguered industry, but we believe that all the major producers will continue to be in the red.

UNI

Business