Tata Steel's fourth quarter consolidated net profits received a 70 per cent boost, thanks to the one-time restructuring proceeds of Rs 2,310 crore mainly from the sale of the under-performing Teeside Casting facility. The company's operating profits (EBIDTA) for the March quarter slipped by around 6.2 per cent to Rs 4,466 crore compared to the same quarter a year ago. Sales grew by 23 per cent to Rs 33,000 crore during the quarter as the company's rising raw material costs necessitated steel price hikes.

Iron ore, metallurgical coal and semi-finished and finished steel products in the form of raw material costs as a percentage of sales rose by around nine percentage points to 46 per cent.

The company's EBIDTA margins slipped from 17 per cent levels to 13.2 per cent. The company faces a rather challenging set of operating conditions given that the full impact of higher coking coal prices may be felt only in the coming quarters.

Cost pressure

The company is reliant on external sources for its European operations. With iron ore prices trading at significantly high levels, cost pressures may be felt more acutely by Tata Steel.

The company's net profit excluding exceptional items declined by roughly a third to Rs 1,900 crore from the same period a year ago. Divestment in Teeside coupled with the sale of its domestic refractory lining unit and capital raising would make it well placed to go ahead with expansion plans, especially in India. The company's net debt equity ratio as of March stands around 1.4 times. . .

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