 "Tata Steel Q4FY24 results: Net profit drops 64.1% to Rs 611.48 cr")
Tata Steel, India’s second-biggest steelmaker by market capitalisation, reported a 64.1 per cent year-on-year (Y-o-Y) drop in consolidated net profit at Rs 611.48 crore in the fourth quarter ended March 2024 on lower steel realisation and restructuring cost relating to UK.
The steel major’s net profit in the year-ago period stood at Rs 1,704.86 crore.
The consolidated revenue from operations was Rs 58,687.31 crore, down 6.8 per cent Y-o-Y. The Bloomberg consensus overview the estimate for revenue was Rs 58,375.1 crore and the net income was Rs 928 crore. Sequentially, the revenue was up 6.1 per cent and the net profit up 19.1 per cent. For FY24, the consolidated revenue stood at Rs 2,29,170.78 crore compared to Rs 2,43,352.69 crore in FY23.
The board has recommended a dividend of Rs 3.60 per fully paid-up equity share of face value of Rs 1 each.
The board of Tata Steel approved a proposal to infuse funds of up to Rs 17,407.50 crore, by way of subscription to equity shares of T Steel Holdings Pte Ltd (TSHP), a wholly-owned foreign subsidiary of Tata Steel, in one or more tranches, during FY24-25.
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In an exchange filing, the company said that the proposed fund infusion would be used by TSHP to repay the existing external debt at offshore entities and to support the restructuring costs at Tata Steel UK Limited.
Further, the existing debt instruments of $565 million (approximately Rs 4,661.25 crore), held by Tata Steel Limited in TSHP will be converted into equity shares of TSHP which will continue to be held by Tata Steel Limited.
Restructuring UK operations
TV Narendran, chief executive officer and managing director, Tata Steel said that with respect to the UK operations, the company has decided to proceed with the proposed restructuring of the heavy-end UK assets and transition to greener steelmaking after due consideration of all the options over the last seven months in consultation with union representatives.
The company is looking to transition from emission-intensive blast furnace technology to electric arc furnace route.
Koushik Chatterjee, executive director, and chief financial officer, said: “With respect to the electric arc furnace, we will place equipment orders by September 2024 and have signed the agreement with the UK National Grid securing the high voltage connection, which will be available on schedule.”
“We have, as part of discussions with the unions, offered the best package of support for affected employees in Tata Steel UK. We have also agreed the final and detailed terms of the proposed grant package with the UK government to support the £1.25 billion investment,” he added.
UK annual revenues were £2,706 million and Ebitda loss stood at £364 million. For the quarter under review, the revenues were £647 million, while the Ebitda loss stood at £34 million.
The Netherlands’ annual revenues were £5,276 million and the Ebitda loss stood at £368 million. The company attributed it to the reline of blast furnace 6 which was completed in early February.
Domestic operations
India revenues were at Rs 1,42,902 crore for the full year (FY24) and Rs 36,864 crore in Q4FY24.
Narendran said that domestic deliveries were the best-ever at around 19 million tonnes, up 9 per cent YoY with broad-based improvement across chosen market segments.
Overall, India deliveries now make up 68 per cent and Narendran said that it would continue to grow with incremental volumes from 5 million tonnes per annum (mpta) capacity expansion at Kalinganagar.
The company has spent Rs 4,850 crore on capital expenditure during the quarter and Rs 18,207 crore for the full year.