Tata Steel posts Rs 1,017 crore consolidated net profit in Q2

Committed to growing India business, building long-term investments in Europe

Tata Steel on Monday reported a consolidated net profit of Rs 1,017 crore in the September quarter, as against a loss of Rs 49.4 crore in the corresponding period last year. At the consolidated level, this is a profit for two consecutive quarters; it reported a net profit of Rs 921 crore for the June quarter.

The company that has lined up for buying out lenders of four debt-laden steel companies has also said it is committed to the second phase expansion at its Kalinganagar (Jajpur district) unit in Odisha, with a bullish outlook on demand. “Our discussion for expansion at Kalinganagar by five million tonnes (mt) is at an advanced stage and we do not see any delay in this. Engineering at the facility has started and the timeline provided should remain the same,” said T V Narendran, managing director for Tata Steel India operations. He was speaking at the announcement of the September quarter results.

The blast furnaces at Kalinganagar’s first phase (three mt) were at 100 per cent utilisation and the downstream facilities at 95 per cent, the management said. 

Tata Steel is among aggressive bidders for some of the large NCLT-listed entities. It is the only company which has made expression of interest for all four assets — Monnet Ispat, Essar Steel, Electrosteel and Bhushan Steel & Power.

Brokerages were of the view that inorganic growth route along with brownfield expansion may not augur well for the company. Hence, an assurance of brownfield expansion from the management brings more clarity on the company’s capacity building strategy.

“We are committed to further growing our business in India, while building a long-term investment in a strong European portfolio,” said Koushik Chatterjee, group executive director.

The company’s consolidated quarterly revenue was Rs 32,464 crore, up 20 per cent over a year and five per cent over the June quarter. Consolidated deliveries were 6.45 mt, up 15 per cent year-on-year; India deliveries were 48 per cent of the total. “Our growth at India operations was broad-based, with all verticals registering strong performance,” said Narendran. 

The automotive segment grew 34 per cent over a year before, with a focus on new grade development and vehicle models. Sales in the branded products and retail solutions segment grew 14 per cent, with strong volume growth in emerging customer accounts. The industrial products, projects and exports segment grew 11 per cent, including 60 per cent more in targeted value added and new segment sales. The company said it developed 27 new products across segments in the year.

Bloomberg had earlier put the consolidated revenue at Rs 32,295 crore in the quarter and the profit at Rs 1,663 crore.

Consolidated Ebitda (earnings before interest, taxes, depreciation and amortisation) was Rs 4,726 crore, the margins up 14.6 per cent. Sequentially, however, this was lower from the Rs 4,939 crore in the June quarter, “due to seasonally weaker performance in our European operations”, said Chatterjee.

For Europe, revenues were higher by 32 per cent over a year, reflecting higher deliveries and sales of differentiated products. Ebitda was £89 million, down £38 mn from a year before, primarily due to lower spreads with higher raw material prices, said the management.

“In a relatively stable market environment, we continued to strengthen our sales mix, with deliveries of higher value differentiated products increasing by almost 200 basis points in the past year to about 38 per cent of total sales,” said Hans Fischer, managing director of Tata Steel Europe. Made possible by new products, of which there were five launched in the quarter, he said.