Tata Steel expects to improve its performance in the ongoing quarter on back of increased prices of steel and softening raw material costs.

The company has increased prices of steel products by Rs 1,000 per tonne in the domestic market, Kaushik Chatterjee, chief financial officer at Tata Steel said at a post earnings conference call on Friday. The company is also seeking shareholders approval to increase its borrowings by a quarter to Rs 50,000 crore.

Bhavesh Chauhan, an analyst at Angel Broking said, “Going forward the company is expected to perform well as steel demand is reviving. While in the domestic market steel prices are moving up, in the European market steel prices are also stabilising. Further capacity addition in Jamshedpur unit will also help the company’s performance.”

The company reported a consolidated net loss of Rs 602.67 crore in the third quarter of the ongoing financial year for the first time in the last two years. This is the second time in 2012 that the company has hiked prices. The world's seventh largest steelmaker reported 15 per cent year-on-year increase in net sales to Rs 32,964.15 crore. Dismal performance of European operations, sharp increase in raw material costs, and low realisations hurt the company's earnings in the October-December 2011 quarter.

Tata Steel shares on Friday were up 5.3 per cent from its previous close on Bombay Stock Exchange and ended at Rs 475. “Tata Steel’s input costs surged in October-December because of high coking coal prices,” said Chatterjee. Even though global coking coal prices softened in the quarter, the company did not benefit because it had signed long-term contracts for the raw material, he said.

On account of higher input costs the company’s operating margin fell to 5.2 per cent in December 2011 quarter from 8.5 per cent sequentially.

Chatterjee said the company has earmarked capital expenditure of nearly $1.9 billion (Rs 9,443 crore) for 2012-2013. Tata Steel also said it would commission a 2.9 million tonnes per annum brownfield expansion in Jamshedpur by March 2012. The capacity expansion is expected to increase the company's sales volume by one million tonne in 2012-13 (April-March), said Chatterjee.