Tata Iron and Steel Limited (Tisco) has reported a sharp jump in net profits for the quarter ended 31st December 1999. The company has benefited from an improved product mix and an improvement in realisations.
Tisco (FY99 Net Sales Rs 62,746 m), a part of the Tata Group, is India's largest integrated private sector steel producer.
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During the quarter Tisco has accounted for the profit on sale of its cement division to international cement major, Lafarge. The company has however not disclosed the exact contribution of this sale to the bottomline.
The company's operation profit margin looked up during the quarter as it was able to pass on a price hike to its consumers. It is expected that the effect of this will be felt more strongly in subsequent quarters. The other factor that helped improve profitability was the shift in the product mix towards finished products including longs and flats.
Tisco has also continued to provide for employee separation costs. It has over the years been pursuing very aggressively an employee rationalisation policy that has seen its employee base dwindle to 57,000 numbers from a high of 72,000 some years back.
The steel sector has been successful in passing on a price hike to its consumers. However, the diesel price hike and a threat of increased imports can once again lead to a scenario of deteriorating margins.
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