Tata Steel's Q2 consolidated net profit plunges 60% to ₹1,635 cr3 min read . Updated: 13 Nov 2020, 07:50 PM IST
- India operations generated an EBITDA of ₹6,025 cr and Tata Steel standalone EBITDA margin crossed 29% with an EBITDA/t of ₹13,127
- Swedish steelmaker SSAB confirmed it is in discussions concerning a potential acquisition of Tata Steel Europe's Dutch IJmuiden steel mill
New Delhi: Tata Steel on Friday reported 60% decline in net profit at ₹1,635 crore for the quarter ending 30 September, 2020. The steelmaker reported net profit of ₹4,044 crore in the year-ago period.
India operations generated an EBITDA of ₹6,025 cr and Tata Steel standalone EBITDA margin crossed 29% with an EBITDA/t of ₹13,127.
The consolidated revenue from operations rose 7% to ₹37,154 crore as against ₹34,579 crore in September 2019. All major sites in India operating close to full capacity utilization, said the company.
"Tata Steel has delivered strong results in India with broad based, market leading volume growth and strong cashflow generation. The resilience of our business model and the commitment of our teams has enabled us to ramp-up capacity utilization to normal levels and achieve highest ever sales despite the ongoing challenges due to the COVID pandemic. There has also been a significant improvement in product mix towards domestic sales and higher value-added products and a sharp reduction in costs. We are now embarking on re-organizing our Indian subsidiaries into four verticals to drive scale, synergies and simplification which we are confident will create value for our stakeholders.
"In Europe, though the overall environment remains challenging and recovery is more gradual, there has been an improvement in volumes and sales mix. We will continue to drive performance and work on a strategic resolution to ensure the focus remains on cash flows and self-sufficiency. We are continuing our discussions with the UK Government regarding the future strategy of our UK business," said T.V. Narendran, CEO & Managing Director, Tata Steel.
Meanwhile, Swedish steelmaker SSAB on Friday confirmed it is in discussions with Tata Steel Group concerning a potential acquisition of Tata Steel Europe's Dutch IJmuiden steel mill and related downstream assets.
"SSAB has participated in several different discussions concerning consolidations in the European steel industry," SSAB said in a statement. "The discussions with Tata are on-going but no decisions have been made."
SSAB has been reported to be in discussions with both Tata and Germany's Thyssenkrupp recently and Reuters reported last week that SSAB was interested in the IJmuiden plant in the Netherlands.
"There can be no certainty that any transaction will materialize, nor as to the terms of any such potential transaction," SSAB added in Friday's statement.
“It is very heartening to report that despite the pandemic, Tata Steel has delivered one of the best quarterly results in India in the recent times. This was driven by relentless focus on operating performance and a reduction in our cash costs by almost 14% on a quarter on quarter basis. India operations generated an EBITDA of ₹6,025 crores and Tata Steel Standalone EBITDA margin crossed 29% with an EBITDA/t of Rs.13,127.
"We continue to pivot the business decisions on cash while aggressively managing costs and being highly disciplined on capex to ensure we progress on our deleveraging journey. This quarter we reduced our consolidated net debt by ₹8,197 crores which is now below March 2019 levels. We ended 2Q with a liquidity buffer of Rs.24,323 crores with about Rs.17,824 crores in cash & cash equivalents which along with robust internal generation gives us enough headroom to further deleverage going forward. Based on the discussions, initiated by SSAB Sweden, regarding a potential acquisition of Tata Steel’s Netherlands business, we will undertake a due process and move to the next stages including consultation and due diligence.
"In India too, we are moving on the consolidation and the corporate simplification process with the announcement today of the merger of Tata Metaliks and Indian Steel and Wire products into Tata Steel Long Products," said Koushik Chatterjee, Executive Director and CFO, Tata Steel.
On Friday, Tata Steel's scrip on NSE closed 3% higher at ₹487.50.