 "Tata Steel net up 22%")
The other income worth Rs 2,808 crore was derived from sale of stake in Titan Company and Tata Motors, lent firm support to the company's bottom line, without which it would have reported significantly lower profits.
Total expenses of the company too stood lower at Rs 28,846 crore in the period under review, against Rs 33,563 crore in the year-ago quarter. According to Bloomberg estimates, the company's net sales was seen at Rs 30,033 crore, while company was expected to report losses. In the period under review, among key exceptional items, Tata Steel took an impairment of Rs 8,669 crore on its strip business in UK and also reported a credit of Rs 8,570 crore from the triennial valuation process of British Steel pension scheme. Total exceptional expenses stood at Rs 564 crore whereas the year ago period had exceptional income of Rs 1,145 crore.
The core business, however, was impacted by weak demand environment across regions during the quarter. "The underlying operating performance of Tata Steel has been impacted by weak economic environment, relative currency movement and surge in imports in India and Europe," Koushik Chatterjee, group executive director (finance and corporate), said at the earnings conference here on Thursday.
The company's underlying Ebitda (earnings before interest, taxes, depreciation, and amortisation), excluding one-offs and profit of sale of quoted investment, stood at Rs 1,985 crore in September quarter, way lower that Rs 3,997 crore in the corresponding period last year. It was also lower than Bloomberg estimates of Rs 2,426 crore.
The company's net debt as on September 30 stood at Rs 73,000 crore with no significant repayments to be made in the remaining part of the year, said the management.
The good part is that despite the difficult environment, the company has been able to bring it down even if it is marginal.
"We have in fact made a prepayment of Rs 2,900 crore in the ongoing quarter," said Chatterjee.
He said the company does not see any need to refinance its debt and is in a good position after the recent refinancing it had done.
On standalone basis, the company's net profit was up 2 percent on year-on-year basis at Rs 2,523 crore as other income and marginally lower finance costs offset the impact of loss incurred at the exceptional items levels.
"Steel demand in the domestic market was impacted due to cheap imports and monsoons which also hurt the rural demand," T V Narendran, CEO at Tata Steel India and South East Asia.
The outlook for Europe also remains weak, said Karl Koehler head Tata Steel Europe.
The Europe operations due to restructuring are expected to lose about 2000 jobs, he said.
Meanwhile, in India, its three million tonne Kalinganagar plant has begun operations in phases and commercialisation is not far away. This should add to its domestic volumes, where profitability is higher as compared to other regions. The company's efforts towards lowering costs and focusing on value-added products (whose share has been close to half) should help further. In an environment of weak demand and cheap imports, the 9% increase in sales volume to 2.33 MT is noteworthy.