ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Fruits of Decontrol

Fruits of Decontrol Hansavivek TATA IRON AND STEEL COMPANY (TISCO) suffered a setback in its working results for 1983-84 due chiefly to heavy additional burden of interest and other cost escalations. With commissioning of new units under phase I of modernisation programme, saleable steel output edged up to a new high mark of 16.26 lakh tonnes against 16.21 lakh tonnes in previous year and sales at 15.13 lakh tonnes were also three per cent higher In terms of value, sales brought in Rs 781.09 crore against Rs 687.56 crore but gross profit declined from Rs 68.64 crore to Rs 63.95 crore, reflecting a sizeable erosion of margins. Provision for depreciation was increased from Rs 23.77 crore to Rs 43.14 crore. Of this increase, about Rs 10 crore was accounted for upward revision in rates of depreciation introduced under Income-tax rules. Net profit was thus more than halved to Rs 20.81 crore (Rs 44.87 crore) which covered .unchanged dividend of 17 per cent 1.70 times as against 3.59 times. From October I, 1983, government revised Steel Development Fund (SDF) levies to range from Rs 350 to Rs 500 per tonne, as against Rs 600 per tonne uniformly for all categories payable earlier by TISCO. From April 1, 1984, certain special steels have been exempted from payment of SDF levies, besides effecting a certain reduction in rate of levies on defectives. Government also decided to reduce interest on SDF loans and charge differential rates of interest on different types of projects. Revised rates were made applicable to all loans sanctioned on or after October 1, 1983 and also to old loans outstanding on that date. Company's application to Bombay High Court and Indian Tube Company's application to Calcutta High Court for approvals to proposed amalgamation of two companies are pending. Governments approval under MRTP Act is also awaited. Asa measure of diversification company has agreed, subject to approval by government, to purchase bearings manufacturing plant of Metal Box India at Kharagpur as a going concern with effect from October 1, 1983. Pending receipt of approvals, Metal Box is managing plant on behalf of company. Company has purchased 55,000 equity shares of Rs 10 each in Davy Ashmore at Rs 18 per share and has agreed to purchase further 1,25,500 shares from its parent company, Davy McKee of UK, at a price of Rs 17 per share. Proposal is awaiting clearance from RBI under FERA. Company subscribed to 299 'rights' shares of Rs 1,000 each at par offered by Tata Services. It is awaiting government's approval under Companies Act to its proposal to invest Rs 107 lakh in share capital of Kumardhubi Metal Castings and Engineering Company, a joint sector company, with Bihar State Industrial Development Corporation and compnay as partners. Company has also accepted offer of 36,360 'rights' shares of Rs 100 each of Tata Industries. In response to company's 'rights' issue on non-convertible debentures of face value of Rs 50 crore, company received applications for Rs 99 crore. In view of its need for more funds, board of directors decided to accept subscription upto Rs.75 crore, subject to consent of Controller of Capital Issues. A new company under name 'Kalimati Investment Company' has been promoted to enable TISCO to hold some of its investments in other companies as well as to make new investments in pursuance of business operations. TISCO has invested Rs 50 lakh in its capital and intends to subscribe a further Rs six crore. Kalimati has obtained government's approval to acquire at par shares of face value of Rs 2.92 crore in Special Steels. This block constitutes 57.27 per cent of equity capital of that company.

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