Steel major Tata Steel on Thursday posted an increase of near 22 percent in its net profit at Rs.1,529 crore for the quarter ended September 30 this year although its turnover headed southwards by 18 percent.
During the same months last year, it reported a net profit of Rs.1,254 crore.
The turnover for the second quarter of the current fiscal year stood at Rs.29,305 crore as against Rs.35,777 crore in the similar quarter of last fiscal, while deliveries also saw a decline at 6.33 million tonnes in the quarter under review as against 6.50 million tonne in the July-September time period in 2014.
Domestic realisations in India continued to witness increasing pressure.
In a statement, the company said subdued manufacturing activity in the country adversely affected the underlying domestic steel demand which decreased by 5 percent over the previous quarter. Further, the relatively strong currency exacerbated the problem.
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India continued to see strong imports from China and other FTA countries like Japan and Korea with net imports rising by over 100 percent over corresponding period last year.
The company said the market conditions in Europe, primarily in Britain, worsened significantly in the second quarter as Britain continued to witness surge in imports and declining competitiveness of the manufacturing sector.
Southeast Asian operations continued to witness drop in rebar-scrap spreads and intense pricing pressure on back of imports from China. However, the renewed focus on cost saving initiatives, new markets, downstream sales and exports, led to improved profitability.
The company has decided to restructure its Chinese operations in Xiamen and consequently have taken a charge of Rs.158 crore during this quarter.
"Despite the ongoing downturn in global commodity prices and the seasonal weakness in demand, we were able to increase our deliveries by nine percent during the quarter on the back of strong sales to the auto sector and a higher proportion of value added products.
"This coupled with better operational efficiencies has helped us partially counter the headwinds of increasing imports and lower steel prices," said Tata Steel India and Southeast Asia managing director T.V. Narendran in the statement.
