Tisco net profit falls but dividend stays

Marketmen generally welcomed the performance in the backdrop of a sluggish steel market. Although, the share price of Tisco dropped to Rs 165 in kerb deals from the official closing of Rs 173.50, it recovered partially to Rs 169 in view of dividend being maintained.

The gross saleable steel output was 4 % higher at 2.82 million tonnes. With better utilisation of the finishing mills, proportion of semi-finished steel declined from 33 % in the previous year to 29 %. Further, continuous cast slabs/billets improved from 51 % to 56 %. Production of the Hot Strip Mills at 1.04 million tonnes exceeded its rated capacity of one million tonnes. As a measure of cost reduction, coal tar injection was introduced in some of the blast furnaces.

The gross revenue: sales of products/services during the year higher amounted to Rs 6,351.46 crore against Rs 5,854.12 crore last year and other income at Rs 57.97 crore (Rs 25.84 crore), making a total income of Rs 6,409.43 crore against Rs 5,879.96 crore. After depreciation of Rs 326.83 crore against Rs 297.61 crore, less expenditure transferred to capital of Rs 134.53 crore against Rs 72.16 crore and interest of Rs 274.36 crore against Rs 279.48 crore, the profit before taxes and employee separation compensation amounted to Rs 620.91 crore against Rs 602.44 crore.

After employee separation compensation of Rs 78.70 crore (Rs 36.65 crore) and taxation of Rs 73 crore (nil), the profit after taxation dropped to Rs 469.21 crore from Rs 565.79 crore. A sum of Rs 150 crore (Rs 183 crore) has been transferred to debenture redemption reserve and Rs 150 crore against Rs 200 crore to general reserve.

According to management, globally, the steel market was sluggish and India was no exception. The demand for steel, which was buoyant in the first half, dramatically changed in the second half of the year. This, coupled with cheap imports, tight money market conditions and additional capacity coming on line, had an adverse effect on the realisation and the margins, which decreased in the second half.

Even so steel, which is the core business of the company fared better. This was possible due to lower semis, a richer product-mix and cost saving measures undertaken by the company. Cement division bettered its performance over last year, through it has still not reached its installed capacity. Ferro-chrome and chrome ore concentrate margins came under severe pressure due to the downward cycle in this business.

The annual general meeting of the company will be held on July 31, to consider the accounts for 1996-97.