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Tata Steel reported a consolidated net profit of Rs 1,254.33 crore for the quarter ended September 30, up 37% from Rs 916.77 crore profit in the same quarter last year, helped by a one-time gain from land sale. Sales fell 2% to Rs 35,503.25 crore during the quarter, hurt by lower realizations in its Europe business.
Analysts were expecting Tata Steel was expected to report a consolidated net profit of .`803.01 crore on revenue of Rs 36,417.96 crore, according to a Bloomberg poll.
Consolidated results include performance of Tata Steel's India, Europe and South East Asia businesses. Tata Steel is India's largest private sector steelmaker by revenue. Sales volumes grew to 6.50 million tonnes (mt) compared with 6.48 mt same quarter last year. Earnings before interest, depreciation, tax and amortization (EBITDA) was Rs 3,750 crore, down 1% from Rs 3,784 crore during same quarter last year.
The company said that the reforms announced by the new government are yet to translate into on the ground economic revival in India, and rising imports likely to keep the domestic prices in check. It also said costs in India were pushed up by scarcity of iron ore in the country right now.
"Steel demand has been disappointingly flat over the last six months. We hope that stable political climate will give reforms and spur steel demand in fiscal 2016 if not second half of this year," said TV Narendran, managing director, Tata Steel.
Sales volumes in all regions were hurt by rising imports on cheap Chinese steel. While Indian volumes grew slightly to 2.11 mt from 2.04 mt during the quarter, volumes in Europe fell to 3.36 mt from 3.46 mt last year. Rise in Chinese steel imports constrained Tata Steel Europe's ability to benefit from better market conditions in the region.
Tata Steel declined to share an estimated sale value of its long product business and associated distribution activities in Europe, which is currently undergoing due diligence by Swiss-based Klesch Group. It also did not share any expected timeline on deal. It, however, said that it was open to looking at alternatives to sale being proposed by labour unions.
Tata Steel also completed refinancing $7 billion debt, making an interest saving of 25-40 basis points on different tranches. The company had a consolidated net debt of Rs 68,347 crore ($11.12 billion) on September 30, slightly lower than Rs 68,540 crore in the previous quarter.
Apart from better rates and terms, the refinancing has helped improve the company's liquidity position and lengthened the maturity profile by 5 years, giving it a cushion to weather any downsides in the cycle, said CFO Koushik Chatterjee.
Tata Steel earned Rs 1,146.86 crore by selling a land parcel in Borivali, Mumbai to Oberoi Realty. The company has been offloading non-core assets to pare debt. Chatterjee said the funds will be used to finance Tata Steel's capital expenditure plans. It spent Rs 1,300 crore on its upcoming Kalinganagar plant in Odisha during the quarter.
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- [Editor:sunzhichao]
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