A worker supervises the flow of hot liquid metal as it flows from the blast furnace during the iron smelting process. (Photographer: Krisztian Bocsi/Bloomberg)

Tata Sponge Says Strong Volume Growth To Offset Rising Input Costs

Tata Sponge Iron Ltd. expects strong volume growth to aid earnings and offset rising input costs this year.

A decline in fixed costs, better operating efficiency and high volumes led to a strong first quarter for the sponge iron maker, Managing Director Sanjay Pattnaik told BloombergQuint in a post-earnings interaction.

The company's realisations have come down by Rs 1,500 - Rs 2,000 per tonne on a sequential basis. Pattnaik expects these to improve in the third and fourth quarter of the current financial year. "The second quarter is generally weak for us,” he said.

Fixed costs for Tata Sponge have come down despite an increase in raw material prices. Pattnaik also does not see Iron ore prices rising any further after a 20 percent increase on a sequential basis.

Tata Sponge’s key Q1 earnings highlights (year-on-year):

  • Revenues up 49.1 percent to Rs 260.9 crore.
  • Net profit up 49 percent to Rs 45.6 crore.
  • Earnings before interest, tax, depreciation and amortisation up 55.6 percent to Rs 60.2 crore.
  • Margins expand 100 basis points to 23.1 percent.

Watch the full conversation here: