Tata Sponge

This Tata Steel parentage company had a pretty bad Q4FY15 with net profit for the quarter declining 79% (YoY) at Rs.7 crore from Rs.40 crore in Q4FY14. Net sales slumped 30% to Rs.160 crore.

Two factors affected the performance – firstly, demand for sponge iron was low and then the cost which the company had to pay for iron ore were very high – some Rs.2000/tonne higher on YoY. Thus lower demand which meant lower realisations and higher costs pulled down the earnings of the company in Q4.

In terms of volume growth, it was at 87,000 tonne v/s 1,05,000 tonne and sales were at 82,000 tonnes v/s 1,08,000 tonnes. Thus volumes as well as sales were down in Q4. Things are not expected to change for the better in current Q1 as the same situation persists – low demand, low sales realization and the company is also planning on a major annual shut down for maintenance. Lets hope that a loss is averted in the current quarter.