100th Annual Report 2006-2007 - Tata Steel

Directors’ Report 2006-07
annual steel demand over the next ten years. The main drivers of
this growth are the expected large investments in infrastructure,
large-scale construction activities and the sustained rise in
demand for auto and white goods from a burgeoning middle
class in the country.
While the robust steel demand globally has enabled the steel
prices to remain buoyant, there has been significant pressure on
margins from increased raw material prices on non-integrated
steel players.
Business Results
The Company achieved the best ever sales turnover and
profitability during the year under review. A robust Indian
economy, firm steel prices, higher volumes and several
improvement initiatives contributed to the record performance.
Finished steel sales were higher by 11.33% at 4.51 million tonnes
over the previous year. Export turnover was lower by about
5% due to lower volumes. Average price realisation improved
mainly due to higher prices of hot rolled coils/sheets. Operating
profit was higher by over Rs. 1,000 crores at Rs. 6,973 crores
(2005-06: Rs. 5,938 crores), an increase of 17% over the previous year.
Net interest charges were higher at Rs. 174 crores (2005-06: Rs. 125
crores), due to additional borrowings for the Company’s domestic
expansion programs and funding Company’s contribution for
financing the acquisition of Corus Group plc. After providing
for Rs. 819 crores for depreciation (2005-06: Rs. 775 crores) and
Rs. 152 crores towards employee separation scheme (2005-06: Rs. 53
crores), the profit before tax rose by 20% to Rs. 6,262 crores (2005-06:
Rs. 5,240 crores). Net Profit after taxes was higher at Rs. 4,222 crores
(2005-06: Rs. 3,506 crores), an increase of 20% compared to the
previous year.
The record financial results would not have been possible without
a matching performance by the operating departments including
the raw materials division. The year witnessed the best ever
crude steel production by the Company at 5.05 million tonnes,
an increase of 6.7% over the previous year. Jamshedpur Plant
became the first plant in India to produce more than 5 million
tonnes of crude steel in a year. The upgraded “G” Blast Furnace
produced over 2 million tonnes of hot metal, as against its rated
capacity of 1.8 million tonnes. Among the Finishing Mills, the
output at the Cold Rolling Mill and the Hot Strip Mill exceeded
their rated capacities. The all-round increase in production was
backed by improvements in operating practices and productivity
The year witnessed the best ever crude steel
production by the Company at 5.05 million tonnes.
Jamshedpur became the first plant in India to
produce more than 5 million tonnes of crude steel.
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