Tata Steel: 2008 Q2 consolidated results

The Group has posted a Net profit of Rs 47036.40 million for the quarter ended September 30, 2008 as compared to Rs 14895.60 million for the quarter ended September 30, 2007. Total Income has increased from Rs 325205.90 million for the quarter ended September 30, 2007 to Rs 442833.40 million for the quarter ended June 30, 2008.

On the face of it, it looks as if the net profit has increased by over 200%. But wait! read the following (from bseindia.com)

- The actuarial gains and losses on funds of employee benefits (pension plans) of Tata Steel UK for the period from April 01, 2008 have been accounted in "Reserves and Surplus" in the consolidated financial statements in accordance with IFRS principles and permitted by AS21. This treatment is consistent with the accounting principles followed by Tata Steel UK and earlier by Corus Group plc. under IFRS. Had the company followed the previous practice of recognizing changes in actuarial valuations of pension plans of Tata Steel UK, in the profit and loss account, the profit from ordinary activities after exceptional items and before tax for the current quarter would have been higher by Rs 9600 million and for half year would have been lower by Rs 43,920 million.

So the this whopping 200% increase in net profit (and that too in recession times like these) is a bit misleading. There has been some change in accounting practices and so the result may be good but not as good as it appears.
However after having a superficial quick look at the Tata Steel results it appears that net sales have increased by 30% which certainly makes it a good result, I think, although not as spectacular as it may seem if one ignores that fact that they have changed some accounting practices.