Tata Steel reported a 6% rise in its second quarter consolidated net profit to ₹3,302 crore led by favourable tax impact of ₹4,233 crore.
The company had a favourable tax impact of ₹4,233 crore, of which ₹2,425 crore was on adoption of the new corporate tax rate by Tata Steel standalone and some subsidiaries in India and ₹1,808 crore on account of recognition/reversal of deferred tax assets and liabilities in offshore subsidiaries.
Profit rose despite a 15.4% drop in revenue to ₹34,579 crore on fall in steel prices.
T. V. Narendran, CEO and MD, said, “The business environment in India and other geographies continued to be challenging and weighed heavily on steel prices. Tata Steel worked closely with customers across business segments to drive sales and maintain volumes. We are focused on driving productivity improvements across our various operations as well as the supply chain to reduce costs and minimise the impact on margins. We hope the end of monsoon season and the onset of festive demand leads to a pick-up in overall consumption and the steel demand.”
Tata Steel consolidated adjusted EBITDA during the quarter fell by more than half to ₹4,018 crore. India operations’ adjusted EBITDA also fell by 46% to ₹3,817 crore with an EBIDTA margin of 18.9%.Consolidated steel production stood at 6.95 million tonnes and deliveries at 6.53 million tonnes. India steel production stood at 4.50 million tonnes and deliveries at 4.13 million tonnes, contributing 63% of consolidated deliveries.
Gross debt for the quarter rose to ₹1,11,549 crore while net debt stood at ₹1,06,952 crore. The company had ₹4,596 crore in cash and cash equivalent and ₹7,262 crore in undrawn bank lines. The firm borrowed $525 million in foreign currency loans in the quarter to lengthen its debt maturity profile.
“A very challenging economic environment saw steel prices drop by over $100/t. While our gross debt has increased during the quarter due to an increase in working capital, we have renewed our focus on cash flow maximisation through operational improvements, working capital reduction and rationalisation of capex which will help us deleverage,” said Koushik Chatterjee, ED and CFO, Tata Steel.
Tata Steel shares on BSE closed up marginally to ₹404.35 in a firm Mumbai market on Wednesday, ahead of the results announcement.
Sanjiv Bhasin, director IILF Securities, told The Hindu , “The results are admittedly weak and the most of the weakness is priced to the European operations.
“The company reported its worst EBITDA in many quarters. However, Indian exports are looking bright and with anticipated demand pick-up, the company should do well.”
