Companies

Asset sale props up Tata Steel’s consolidated profit by 37 per cent

| Updated on: Nov 12, 2014
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Expects demand in India to improve

Tata Steel reported a 37 per cent increase in consolidated net profit for the quarter ended September 30 at ₹1,254 crore, compared to ₹917 crore a year ago, largely due to a one-time income of ₹1,146 crore from the sale of land at Borivali, Mumbai.

Net sales were down 2 per cent at ₹35,503 crore against ₹36,361 crore in the year-earlier period amid fall in realisation at its European subsidiary.

Steel production was up to 6.5 million tonnes (mt), from 6.48 mt in the second quarter last year, even as earnings before interest, tax, depreciation and amortisation (EBITDA) fell to ₹3,750 crore (₹3,784 crore). In India, the company shut down one of the long product divisions for 36 days. EBITDA in India fell marginally to ₹3,196 crore (₹3,202 crore) due to a sharp increase in iron ore prices. Tata Steel imported 2.2 mt of iron ore in the last seven months to meet the acute shortage of domestic supply.

On a standalone basis, the net profit was up 59 per cent in the September quarter at ₹2,476 crore, from ₹1,559 crore last year. Sales were up 9 per cent at ₹10,701 crore (₹9,818 crore).

Mining hurdles

Pending the clearance of mining at Sukinda Chromite Mine and Khondbond Iron Mine in Odisha, the company has stopped production of ferro alloy plants at Bamnipal and wholly-owned subsidiary TS Alloys since August.

In response to a petition filed in the Jharkhand High Court, the State Government informed the Court on November 7 that it is in the process of renewing the mining licence.

The company is operating the mines in Odisha on an ‘Express Order’ issued by the State Government even as it is following the procedure for renewal of lease.

Imports

TV Narendran, Managing Director, Tata Steel, said the company imported 10,000 to 15,000 tonnes of long product Tiscon on a monthly basis from its plant in Singapore and Thailand to tap the southern market during the September quarter.

“Imports from these plants, which are certified by the Bureau of Indian Standards, would continue as moving goods from these destinations will be cheaper than our plant in Jamshedpur,” he said.

The company expects the demand in India to improve in the second half of the fiscal even as it faces the challenge of sourcing iron ore.

Chinese imports

Karl-Ulrich Kohler, Managing Director, Tata Steel Europe, said the rising imports from China continue to hurt steel companies which are already constrained by the sharp drop in demand.

Asked whether the company would look at selling more assets in Europe after putting its long product division on the block, Kohler said portfolio management is an ongoing process, but there are no concrete plans to sell any other assets.

The company’s net debt was at ₹68,000 crore, down by ₹1,600 crore from the same period last year, as it refinanced $7 billion debt.

Published on November 12, 2014

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