Tata Steel, India’s largest private sector steel producer, posted a 84% drop in fiscal fourth quarter consolidated net profit mainly because the year-earlier profit was boosted by a one-time gain.
Tata Steel’s consolidated net profit figure for Q4 FY19 is not directly comparable to Q4 FY18 as it does not include NATSteel Holding and Tata Steel Thailand as they are classified as Asset Held For Sales.
Net profit in the quarter ended 31 March fell to ₹2,295 crore, from ₹14,688 crore a year earlier. Consolidated net profit for 2018-19 declined 49% to ₹9,098 crore.
Tata Steel had a one-time exceptional gain of ₹11,376 crore in Q4 FY18 due to restructuring of a UK pension scheme, which boosted profit in the year-earlier period.
Consolidated revenue climbed 25% in the March quarter to ₹42,424 crore, from ₹33,705 crore a year earlier. Consolidated revenue for FY19 increased 27% to about ₹1.57 trillion from ₹1.24 trillion a year earlier.
In FY19, the company’s revenue from Indian operations increased by 47% year-on-year to ₹88,987 crore, driven by higher volumes and better realizations, while the adjusted Ebitda for the year increased by 56% y-o-y to ₹23,883 crore. Ebitda margin stood at 26.8% and adjusted Ebitda per tonne was at ₹14,687. Ebitda is earnings before interest, tax, depreciation and amortization.
It also said the boards of both Tata Steel and Tata Steel BSL (Bamnipal Steel), formerly Bhushan Steel, have proposed a merger. “The merger will drive operational synergies and efficiencies, reduce the regulatory burden and simplify the group structure. Both boards have relied on valuation reports and fairness opinions provided by independent experts, and recommend a merger ratio of 15 shares of Tata Steel BSL for every one share of Tata Steel. The merger is subject to shareholders and other regulatory approvals," the company said in a statement.
Last May, Tata Steel acquired bankrupt Bhushan Steel for ₹35,200 crore.
FY19 consolidated steel production, as well as deliveries, rose 17% year-on-year to 27.11 million tonnes and 26.8 million tonnes, respectively. Local production alone surged 35% year-on-year to 16.81 million tonnes, while deliveries grew 33% year-on-year to 16.26 million tonnes following the acquisition of Bhushan Steel and ramping up of capacity at the Kalinganagar plant.
Sales were driven by industrial products which grew 42% year-on-year, while branded and retail products grew 30%.
March quarter production was up 26% from the year-ago period to 7.21 million tonnes.
On Tata Steel’s merger of its European operations with Thyssenkrupp AG, the company said it is working to secure the required regulatory approvals for the proposed 50:50 joint venture. The European Commission has issued its ‘statement of objection’ for which both Tata Steel and Thyssenkrupp have submitted a “comprehensive package of proposed remedies". In Q4, Tata Steel cut its consolidated gross debt by ₹8,781 crore. Koushik Chatterjee, executive director and chief financial officer said: “Despite the liquidity issues in the domestic markets, we were able to extend our debt maturity profile by successfully raising ₹4,315 crore through 15-year non-convertible debentures, and completing the long-term financing for Tata Steel BSL."