Mumbai: Increased sales to the automotive and industrial products segments led Tata Steel, the country’s second-largest private sector steel producer, to report consolidated net profit of ₹ 3,116 crore in the September quarter (Q2), up 206% from ₹ 1,018 crore in the year-ago period. The company attributed this to better sales and stronger steel prices in a traditionally weak quarter.
Consolidated revenue increased to ₹ 43,544 crore in the quarter against ₹ 32,464 crore a year ago. Over the same period, consolidated earnings before interest, taxes, depreciation and amortization (Ebitda) increased from ₹ 4,664 crore to ₹ 9,000 crore. The Ebitda margin was 21% while Ebitda/tonne, a key metric of a steel producer’s profitability, was ₹ 12,131. The company spent ₹ 2,177 crore in capital expenditure in Q2. Consolidated steel production in the quarter was 7.26 million tonnes (mt) while deliveries stood at 7.42 mt.
“This has been one of the best ever quarters for Tata Steel India on the back of strong operating and market performance... The Bhushan Steel integration and synergies have been on track and that is reflected in the Bhushan Steel Ebitda margin of ₹ 10,291/tonne," Koushik Chatterjee, executive director and chief financial officer, said on Tuesday.
In May, Tata Steel acquired Bhushan Steel Ltd under the Insolvency and Bankruptcy Code for ₹ 35,200 crore.
One of the company’s key priorities is to reduce leverage by around a billion dollars in the next 12 months, primarily from internal cash flow and sale of non-core assets, Chatterjee said. Net debt was a little more than ₹ 1 trillion at the end of Q2. Chatterjee said the company had already repaid about ₹ 1,000 crore of the debt undertaken to buy Bhushan Steel since the transaction closed earlier this year.
Regarding Tata Steel’s joint venture with Thyssenkrupp in Europe, T.V. Narendran, chief executive officer and managing director, said: “We are in discussions with the European Commission for the Phase 2 review, which typically takes 90 days." To meet the EC’s competition criteria, Tata Steel will have to divest certain electrical, steel and packaging units in the region, Narendran said.
Tata Steel, meanwhile, is also fighting a pitched battle in court with Sajjan Jindal-promoted JSW Steel Ltd to wrest control of another stressed asset, Bhushan Power and Steel Ltd. The next hearing in this case is on 3 December. Tata Steel has contested JSW Steel revising its bid, with Narendran saying, “The IBC process has been compromised."
On Tuesday, Tata Steel shares rose 1.07% to Rs589.15 apiece on the BSE while the benchmark Sensex gained 0.95% to end the day at 35,144.49 points.