Tata Iron & Steel Co (Tisco) seems to have emerged with an all round financial performance during the year upto March 2004. Its economic value added (EVA), net sales, volumes, price realisation, operating profits and margins have improved, as compared to the previous year. No doubt, its efficiency has landed it in the orbit of one of the best global steel companies. 

Net sales for the year to March 2004 grew by 22.7 per cent at Rs 10,702 crore, while volumes rose only 2 per cent to over 4 million tonnes of steel. Exports also increased by 11 per cent to Rs 1,459.7 crore. In terms of US dollars, exports increased by 17.3 per cent at $319.6 million. More than 20 per cent sales growth has come from price realisation in line with the global price rise. The company has also focused on product mix with the changing profile of customer needs. It has added sponge iron to increase volumetric expansion, but it can add up to limited increase in the volumes. 

The company has also focused on value added products with higher margins. Brand making also helped to realise better prices. The company has major brands such as ‘Tata Shakti’ GC sheets, ‘Tata Steelinum’, ‘Tata Tiscon’, ‘Tata Pipes’ and ‘Tata Bearings’ etc, which command a 7-12 per cent premium over similar products in their segments. 

Tisco also introduced the concept of market retail price (MRP), an FMCG sector trademark, in the steel sector. It also extended its customer value management services to understand the customer’s needs and suggest the apt products for their requirements. This not only helped customers in economising on steel consumption and selecting the right kind of products, but also helped the company to capture the loyalty of customers, for which the Tata house governs high reputation. 

The company earns bulk of its sales from long term contracts from large OEM in automobile and customer durable segments and honoured the contract at old prices, despite increased prices in the market. All these factors helped the company, retain its valuable customers. 

On the expenses front, raw material cost rose by 24.8 per cent, to Rs 2,165 crore. On a global level, there has been sharp hike in the prices of raw materials such as iron ore, coke, limestone etc, along with the freight. However, the company improved upon technology to reduce ash content to 16 per cent (17 per cent), which aided immensely in lowering raw material expenses. The company could contend the cost of raw material by sourcing it from their own mines in Thailand, which are closer than mines in Rajasthan and that helped to save on freight also. 

Operating profit jumped 52 per cent at Rs 3,495 crore due to better product mix, which helped in saving on energy consumption, that reduced by nine per cent at Rs 667.5 crore. The company has managed to come up with one of the best operating profit margins, as compared to three global steel majors i.e. Posco, China Steel and Nucor. 

During the year, operating profit margins increased from 26.4 per cent to 32.6 per cent. Further, better working capital management brought down interest liability by 60 per cent to Rs 122 crore. Consequently, despite 250 per cent rise in tax liability to Rs 920 crore, the company posted 72 per cent jump in net profit at Rs 1,746 crore. 

Tisco is pursuing an aggressive expansion in steel making by one million tonnes in Jamshedpur, at the cost of Rs 2,000 crore. This expansion is likely to be complete by September 2005, with the funding of the own accruals. The company has further plans to enhance the capacity by 2.4 million tonnes in Jamshedpur and that will augment the total capacity of the Jamshedpur plant to 7.5 million tonnes. 

The company has also made significant progress in the ferrochrome project in South Africa and eyes a major market share in global trading of ferrochrome.