Tata Steel on Friday reported nearly threefold jump in consolidated net profit at Rs 5,346.55 crore for the quarter ended June, buoyed by mainly one-time gain after sale of stakes in Australian mining firm Riversdale and Tata Refractories.
The company had reported a net profit of Rs 1,825.3 crore during the corresponding quarter of last financial year. Other income formed a major part of this profit push, which stood at Rs 3,882.3 crore versus Rs 59.3 last year. The total income for the group during the quarter stood at Rs 33,000 crore as against Rs 27,193.7 crore in the corresponding period last year, up by 21.4 per cent.
The total expenditure incurred by the group shot up to Rs 29,728 crore as against Rs 23,804.9 crore because of the increase in raw material prices, mainly coking coal.
The company said it consumed raw material worth of Rs 11,227.7 crore in the quarter as against Rs 7,805.5 crore, last year. H M Nerurkar, managing director, said the company managed to post growth in volumes and earnings from India operations despite the signs of slower growth in India. He said high raw material prices and monetary tightening in India remained a cause for concern.
The massive uptick in the other income came on the back of Tata Steel's liquidation of investments in Riversdale of Australia, Tata Refractories Ltd and settlement of arbitration of Teesside Cast Products consortium.
Also, Rs 442.1 crore was added to the other income as the company sold its stake in Tata Refractories Ltd.
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Tata Steel now has 26.62 per cent stake in TRL, which is now renamed as TRL Krosaki Refractories Ltd.
The company said, “Other income in the consolidated results includes profit of Rs 2,879.29 crore on disposal of Tata Steel Global Mineral Holding’s investment in Riversdale Mining Ltd. The company continues to hold 35 per cent stake in Riversdale Energy (Mauritius) Ltd."
Also, Rs 442.1 crore was added to the other income as the company sold its stake in Tata Refractories Ltd. Tata Steel now has 26.62 per cent stake in TRL, which is now renamed as TRL Krosaki Refractories Ltd. Cash settlement of Rs 597.7 crore also boosted the other income relating to the arbitration with the Teeside Cast Products (TCP) Consortium.
The group's earnings before interest, tax, depreciation and amortisation (Ebitda) stood at Rs 8,358 crore as against Rs 4,506 crore, the same quarter last year. The Ebitda is inflated by 'one-off gains' of Rs 4,007 crore. The group's India operations, classified as Tata Steel India contributed Rs 3,656 crore to the consolidated Ebitda and Rs 2,219 crore to the profit after tax.
Tata Steel Europe recorded a 41.2 per cent increase in its Ebitda, at Rs 1,907 crore.
The company said that this was possible because of the higher average realisations.
Dr Karl-Ulrich Köhler, MD & CEO Tata Steel Europe said, "European steelmakers also faced the challenge of sharp raw material cost increases, which have largely been maintained into this quarter, despite the uncertain economic outlook."Tata Steel's South-East Asia operations under NatSteel Holdings reported an Ebitda of Rs 32 crore, down from Rs 94 crore because of the decline in scrap and rebar prices. Electricity costs shot up which added to the squeeze.