Tata Steel Q3 consolidated net up 34%

Tata Steel has posted a 34.21% increase in consolidated net profit at Rs 1,416 crore for the third quarter ended December 31, 2007 after the acquisition of Corus early last year.

The Tata Steel scrip today declined over 6% to Rs 766 on the BSE today as results were below market expectations. Trade analysts, however, expect better performance in the coming quarters led by price increases.

Excluding turnover of Tata Steel UK of Rs 23,867 crore for the quarter, turnover registered an increase of Rs 2,157 crore. The increase was mainly due to increases in Tata Steel’s Indian operations driven by increase in prices. The increase in NatSteel and Tata Steel Thailand’s operations were attributed to price rise and increase in volumes.

The material cost, excluding Tata Steel UK of Rs 11,253 crore, increased from Rs 1,919 crore to Rs 3,003 crore. While increase in volume of operations as well as increase in prices of inputs (scrap) consumed by NatSteel resulted in an increase of Rs 887 crore, Tata Steel Thailand contributed Rs 226 crore to increase on account of increase in volumes. Increase in NatSteel group was also due to increase in purchases of raw materials by TS Resources Australia for use by Tata Steel India.

The interest charges (net) were Rs 1,081 crore. Other than interest charge of Rs 606 crore of Tata Steel UK, remaining increase was mainly due to increase in borrowings to fund acquisition cost of Corus.

Due to rupee appreciation against major foreign currencies, the company had a net exchange gain of Rs 45 crore.

The actuarial gain on funds for employee benefits amounts to Rs 145 crore for the quarter ended December 31, 2007. The gain represents reduction in pension liability arising out of higher discount rate reflecting improved yields on bonds.

Nissan,VW select Tata Steel for India plans

Ford, Maruti, Hyundai, Toyota too source their requirements from the Jamshedpur plant.

Tata Steel, the world’s sixth largest steelmaker, has been selected by Volkswagen and Nissan-Renault as the local steel partner for their projects in India.

A Tata Steel spokesperson confirmed the development but refused to give details.

According to sources, the company has been approved for sourcing steel by the auto majors and specific products will be developed for their respective projects.

“They have lined up major plans for India and details are currently being worked out,” they said.

Nissan is in the process of establishing a plant in Chennai in partnership with Renault. Volkswagen, too, is bullish about the Indian market, as it has already announced that it would introduce two cars this year and build 110,000 cars once its plant goes onstream next year.

The steel for Volkswagen and Nissan-Renault projects would be sourced from Tata Steel’s Jamshedpur plant, whose capacity is being expanded by 2 million tonnes (mt) to 7 mt. The additional capacity will go onstream by June. By 2010, the total capacity will be 10 mt.

Tata Steel has been reorienting its product-mix with a focus on auto grade steel for a while.

In 2006-07, Tata Steel enjoyed 45 per cent of the Indian automotive steel market, translating into seven lakh tonnes of steel, the sources said.

While the exact quantum of auto grade steel production is not known, of the 5 mt capacity at Jamshedpur, flat products, which include auto grade steel, account for 2.1 mt. Apart from these projects, Tata Steel has bagged deal for skin-panel from Hyundai and Ford.

Tata Steel is also a 100 per cent supplier to Maruti Suzuki India for its inner panels and 96 per cent steel for the Toyota Innova.

The company will also supply steel for Nano, Tata Motors’ Rs 1 lakh car. However, sources said some of the steel requirements for the Nano project were likely to be imported given the cost-sensitive nature of the project.

Results Update - 31/01/2008 - Part 3

Tata Steel Q3 net flat at Rs 1,069cr

Tata Steel today reported a net profit (standalone) of Rs 1,068.58 crore for the third quarter ended December, 2007 when compared with Rs 1,063.75 crore reported in the corresponding quarter of the previous fiscal.

According to a release issued by the company to the BSE today, total income for Q3FY08 increased 10.3% to Rs 5,040.95 crore from Rs 4,568.72 crore in Q3FY07.

BPCL Q3 net down marginally at Rs 291cr

Bharat Petroleum Corporation (BPCL) today announced a 4.01% decline in net profit at Rs 291.3 crore for the quarter ended December 31, 2007 when compared with Rs 303.5 crore in Q3FY07.

According to a release issued to the Bombay Stock Exchange, total income increased to Rs 29,118.8 crore for the quarter ended December 31, 2007 from Rs 24,354.3 crore for the quarter ended December 31, 2006.

RCom Q3 consolidated net up 48%

Reliance Communications today reported a 48.5% increase in consolidated net profit at Rs 1,372.83 crore for the third quarter ended December 31, 2007 when compared with Rs 924.45 crore in Q3FY07.

According to a release issued by the company to the BSE today, total income for Q3FY08 was up 29.8% at Rs 4,874.20 crore as against Rs 3,755.30 crore in Q3FY07.

On a standalone basis, the net profit for the quarter ended December 31, 2007 dropped 43% to Rs 436.48 crore from Rs 771.04 crore in the quarter ended December 31, 2006. Total income increased 12% to Rs 3,410.82 crore from Rs 3,044.49 crore in Q3FY07.

Tata Motors Q3 net up 9% at Rs 655cr

Tata Motors today reported a 8.75% increase in consolidated net profit at Rs 654.79 crore for the third quarter ended December 31, 2007 when compared with Rs 602.07 crore in Q3FY07.

According to a release issued to the BSE, the company's total income has increased to Rs 9,324.69 crore for the quarter ended December 31, 2007 from Rs 8,189.66 crore in Q3FY07.

The company, on a standalone basis, reported a 2.75% decline in net profit at Rs 499.05 crore for the quarter ended December 31, 2007 as compared to Rs 513.17 crore in Q3FY07.

The company's total income increased to Rs 7,343.64 crore for the quarter ended December 31, 2007 from Rs 6,910.07 crore for the quarter ended December 31, 2006.

Tata Steel forms limestone JV in Oman

Tata Steel has entered into a joint venture (JV) agreement with Oman-based Al Bahja Group for the development of the Uyun limestone deposits at Salalah in the Sultanate of Oman.

According to an official release issued by Tata Steel to the BSE today, it will be holding 70% stake in the JV firm Al Rimal Mining, through its subsidiary TS Global Minerals Holdings. Al Rimal will execute the project of developing and operating the Uyun Mine.

B Muthuraman, MD, Tata Steel said: "Tata Steel is pleased to have signed this agreement. Tata Steel has nearly 100 years of extensive experience of exploration, modelling, designing and operation of both underground and open cast mines. Tata Steel will continue with its policy of introducing best practices for mining, as well as for management of the environment in the development of the Uyun Limestone Mine in Oman. We value our partnership with the Al Bahja Group, and we are sure that this partnership will play a significant role in the mineral development of the Sultanate of Oman. These investments in mining are the foundations towards achieving Tata Steel's vision of becoming a global benchmark in value creation, corporate social responsibility, environmental protection and safety through passionate, talented and motivated employees".

The initial phase will involve exploration and detailed feasibility studies. The project envisages mining of limestone in the Uyun region which lies in the Salalah province of Oman and has large deposits of limestone."

Tata Steel turnover set to touch Rs 1 lakh cr in FY08

The Tata Steel group, comprising Tata Steel and Corus, will post a turnover of Rs 1 lakh crore by the end of March 2008.

Addressing the media, B Muthuraman, managing director, Tata Steel, said, the group was expected to post a turnover of Rs lakh crore by the end of the current financial year. He said the Corus acquisition in the short-term had put pressure on EBIDTA margins but would double in the next five years. “The second wave of synergies between Tata Steel and Corus will help towards doubling the EBIDTA margins,” he said.

Back home, Tata Steel has lined up major investments for expansion of the Jamshedpur plant and for the Kalinganagar greenfield project.

The MD said the company would invest Rs 20,000 crore in the Jamshedpur plant for scaling up capacity from five million tonnes to 10 million tonnes. The company has already spent Rs 6,000 crore on increasing capacity from five to seven million tonnes.

The investment in Kalinganagar will be around Rs 20,000 crore. Both the projects are likely to be completed by 2010.

Speaking about the delay in the greenfield projects in Jharkhand and Chhattisgarh, Muthuraman said the latter was facing problems on land acquisition while the former was delayed due to delay by the state government in announcing a rehabilitation and resettlement policy.

He said the work on Chhattisgarh project was to start in 2008 and would be commissioned in 2012. The Jharkhand project, which is likely to commence in 2009, will start operations by 2013.

Muthuraman also announced a new project in Gopalpur today. Tata Steel, which already has 3,000 acres in Gopalpur, is planning to set up a galvanizing and colour coating line with a capacity of 150,000 tonnes at an investment of Rs 250 crore.

The new unit will come up at the special economic zone (SEZ) proposed by the steel major and notified by the Union government. Muthuraman said it could be a multi-product SEZ and as a first step, Tata Steel had decided to set up the galvanizing line. Tata Steel was looking to rope in partners to develop the infrastructure for the project.

Tata Steel, SAIL form JV for coal mining

Tata Steel today announced it has signed an equal stakes joint venture agreement with Steel Authority of India (SAIL), for coal mining activities in India.

According to an official release issued by Tata Steel to the BSE today, the JV agreement was signed by S K Roongta, chairman, SAIL, and B Muthuraman, managing director, Tata Steel.

Four suitable medium coking coal blocks in the state of Jharkhand with reserves of around 600 million tonne are under evaluation for this purpose by a joint working group of SAIL and Tata Steel. On allotment of the blocks, the JVC will develop and carry out mining operations for the captive use by SAIL and Tata Steel. Both the companies are expanding their steel making capacities and require secure sources of key raw material inputs like coking coal.

Tata Steel and SAIL had also hiked steel prices this week due to a 10% rise in raw material costs of iron ore and coke during the past few months.

After signing ther agreement, Roongta said: "As the country's steel industry enters a high and sustainable growth phase, raw material availability has assumed critical importance. In order to ensure security of coking coal supplies, it is imperative to augment indigenous coking coal availability. With both SAIL and Tata Steel having distinct strengths in coal mining, this JVC will generate synergy to ensure security of coking coal supplies for both partners."

On his part, Muthuraman said: "India has very limited reserves of hard and semi soft coking coal. With the Indian steel industry poised for a robust growth, it is imperative for us to utilise this scarce resource in the best possible manner. Both SAIL and Tata Steel have unique strengths and capabilities and we see a strong case to synergise these complementary strengths through this joint venture."

Tata Steel, SAIL to form JV for coal mining

Tata Steel and state-run Steel Authority of India (SAIL) are all set to form a joint venture for coal blocks.

"SAIL and Tata Steel are likely to sign an agreement to form a joint venture company for mining four coking coal blocks, most likely in Jharkhand which has reserves of about 500 million tonne for meeting their production needs," a senior government official told PTI.

He said both companies would seek to put in place a formal JV company and then begin scouting for more coal blocks. The board would have representatives from both the companies. The new entity is likely to have an initial capital of Rs 2 crore to be shared equally by the partners.

While SAIL is planning to increase output to 26 million tonne at a cost of more than Rs 50,000 crore, Tata is executing major brownfield and greenfield expansion projects.

Tatas bid for Liberian mines, to put in $1.5 bn

Tata Steel is looking for raw material security at a frenetic pace and the world’s sixth largest steelmaker is now eyeing the Western Cluster Iron Ore deposits in Liberia, for which a bid has already been submitted.

The Western Cluster consists of several deposits spread over 207.58 sq km and the investment is likely to be around $1.5 billion.

When asked, a Tata Steel spokesperson refused to comment and said that the company was looking at all opportunities globally in the area of resource security for the group.

Other companies have also evinced interest in these deposits and Tata Steel has responded to a bid put out by the Liberian government. Tata Steel is one of the shortlisted bidders and the only company from India.

The Western Cluster comprises the Mano River Iron Ore, The Western Position of Bomi Hills Iron Ore Deposits and the Mountain Iron Ore Deposits.

Recently, Tata Steel signed a joint venture agreement with Sodemi (a state-owned Ivory Coast mineral development company) for development of Mount Nimba Iron Ore deposits. Liberia is also on the west coast of Africa.

The Mount Nimba initiative was the first iron ore venture outside India for Tata Steel and the investment in the project by the joint venture company, where Tata Steel holds 75 per cent, could be around $1-1.5 billion in 3-4 years. The company has set a target of achieving raw material security of 50-60 per cent in the next 5-6 years.

Currently, the company’s iron ore security with Corus is 20 per cent, while on a standalone basis, Tata Steel has a 100 per cent security.

Industry analysts said galloping raw material prices were propelling steel companies to run for security cover.

Iron ore prices might jump as much as 50 per cent in 2008. Contract prices for iron ore have tripled in the past five years, and back home, allocation of captive mines has become a time-consuming exercise.

The Tata group consists of Corus and Tata Steel (including Tata Steel Thailand and NatSteel Asia) and the captive iron ore resources would help in bringing down the cost of production at the Corus facilities. Corus requires 28-30 million tonnes of iron ore per annum.

Earlier this month, Tata Steel signed a joint venture agreement with Australia’s Riversdale Mining to set up a special purpose vehicle to develop a hard coking coal and thermal coal project at Riversdale’s key exploration tenements in Mozambique.

On the coal front, Tata Steel has a security of around 15 per cent from a standalone of 60 per cent security.

Vale in talks with Tata Steel for plant in Brazil

Tie-up with world's biggest miner will boost Tatas' ore security

Vale, the world’s largest producer of iron ore and pellets, is in talks with Tata Steel to set up a steel slab plant in Brazil.

The $20 billion mining company, formerly known as CVRD, has three plants under construction in Brazil in partnership with ThyssenKrupp, Dongkuk and Baosteel. Vale has a minority stake in these projects.

According to sources, Vale is in talks with Tata Steel as well as some of its clients for the new steel slab plant.

Replying to a query over a possible partnership with Tata Steel, a spokesperson for the Brazilian company said, “A company as large as Vale is often in talks with several companies, among them Tata Steel from India. But other than that, there is no further information about partnership or anything beyond.”

A Tata Steel spokesperson said, “At this point, there is nothing.”

Tata Steel has a plan to set up a 4.5 million tonnes steel complex in Vietnam in partnership with Vietnam Steel Corporation, the largest steelmaker in the south-east Asian country.

According to industry analysts, a Tata Steel-Vale alliance will be a win-win scenario for both companies.

While Vale is looking to leverage its mineral resources and cash in on the booming steel market, Tata Steel is aiming to set up steel plants close to its raw material base as well as ramp up its raw material security.

Vale’s southern system mines have about 4.5 billion tonnes of iron ore reserves and the production capacity is about 170 million tonnes a year.

In the northern system, the Carajas has a production capacity of 100 million tonnes. The mineral country of Carajas has high iron ore reserves estimated at about 16 billion tonnes.

Tata aSteel, the world’s sixth largest steelmaker, recently signed a joint venture agreement with Sodemi (a state-owned company for mineral development) to develop the Mount Nimba iron ore deposits in Ivory Coast, West Africa.

Tata Steel’s initiatives to step up raw material security is largely on account of Corus, which requires 28-30 million tonnes of iron ore.

Tata Steel has set a target of 50-60 per cent security over the next five years, against the current 20 per cent.

Prior to the Mount Nimba deal, Tata Steel signed a joint venture agreement with Riversdale Mining for a coal project in Mozambique.

Tata Steel: Win-win deal

The steel major's joint venture in Ivory Coast is set to cut costs at the Corus facility

Tata Steel’s announcement of a 75 per cent stake in a joint venture to develop iron ore facilities with a state-owned company in Ivory Coast is clearly aimed at bringing down the cost of production at its Corus facility.

Corus supplies steel to the higher end of the Western European steel market, but it does not have iron ore captive resources in contrast to its parent in India.

Analysts point out that supplies of iron ore from the JV in Ivory Coast could directly help in bringing down Corus’ cost of production by $50-60 a tonne over the medium term. The Tata Steel stock rose 3.4 per cent to Rs 865 on Wednesday.

Tata Steel’s cost of production in the domestic market is estimated at $280-300 a tonne (excluding freight cost to the end-customer), while that of Corus is estimated at more than $450 a tonne.

The production cost is higher at Corus for two reasons: its products are value-added and reasonably complex, and it does not have access to captive resources.

The JV in Ivory Coast would give Tata Steel access to reserves of over 700 million tonnes of ore and it is expected to invest $1.5 billion (approximately Rs 6,000 crore) over the medium term to develop these facilities.

Supplies from this facility will be critical to Corus at a time when global contract iron ore prices are expected to jump, when long-term contracts come up for renewal next year.

In addition, Corus is expanding its output of saleable steel by nearly 300,000 tonnes in FY08 and a further 350,000 tonnes in FY09, which would require crucial raw material supplies.

Prior to this expansion, Corus’ finished steel capacity was 22.1 million tonnes.

To part-finance its Corus acquisition, Tata Steel is planning to dilute its equity by nearly 43 per cent via its rights issue to raise up to Rs 6,000 crore.

Prior to this development in Ivory Coast, Tata Steel has also been focusing on improving its captive raw material supplies via a JV to develop a hard coking and thermal coal project with Riversdale in Mozambique. At Rs 865, Tata Steel trades at a reasonable 12-13 times estimated FY08 and 9.5 times FY09 earnings.

Source - Business Standard