Tata Steel Q2 net rise 6% to Rs 3,302 cr

Tata Steel on Wednesday posted a 5.9 percent rise in consolidated net profit to Rs 3,302.31 crore for the quarter ended September 30, 2019, compared to that of Rs 3,116.20 crore in the year-ago period. Consolidated total income of the company declined to Rs 34,762.73 crore in the July-September quarter from Rs 41, 257.66 crores in the year-ago period, Tata Steel said in a filing to BSE.

Commenting on the results, company CEO and Managing Director T V Narendran said that the business environment in India and other geographies continued to be challenging and weighed heavily on steel prices. "Tata Steel worked closely with customers across business segments to drive sales and maintain volumes. We are focused on driving productivity improvements across our various operations as well as the supply chain to reduce costs and minimize the impact on margins.

"We hope the end of monsoon season and the onset of festive demand leads to a pick-up in overall consumption and the steel demand," he said. "Our acquisitions continue to stabilize and improve on their operating performance. Our Kalinganagar Phase 2 expansion program is progressing well and we are prioritizing the Pellet plant for cost reduction and the CRM plant for value addition. We are also re-organizing our India footprint in four verticals to drive scale, synergies and simplification which will create value for our stakeholders," he said.

Amidst a very challenging economic environment which saw steel prices drop by over USD 100/t, Tata Steel reported consolidated revenues of Rs 34,579 crores and consolidated adjusted EBITDA of Rs 4,018 crore, Tata Steel Executive Director and CFO Koushik Chatterjee said. "Our India operations reported an adjusted EBITDA of Rs 3,817 crores, which is an EBIDTA margin of 18.9 percent," he added.

While the company's gross debt has increased during the quarter due to an increase in working capital, Tata Steel has renewed its focus on cash flow maximization through operational improvements, working capital reduction and rationalization of CAPEX which will help the company deleverage, he said. "During the quarter, we tied up USD 525 million of foreign currency loans which will help lengthen our debt maturity profile. Our liquidity position continues to be strong with a cash balance of Rs 4,596 crore and unutilized bank lines of Rs 7,262 crore," he added.

The merger of Tata Steel BSL (formerly Bhushan Steel Ltd) with Tata Steel, was underway, the company said adding that it was working to complete the process by end FY2019-20, subject to necessary regulatory approvals. "India steel deliveries grew 4 percent QoQ to 4.13 mn tons in 2QFY20," the company said.

Despite the slowdown, the company was able to successfully maintain its sales volumes in branded products and retail segments and industrial product and project segments. The sharp slowdown in the automotive sector, particularly in the commercial vehicle segment, was offset by higher export, Tata Steel said.

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