Tax gains help Tata Steel grow Q2 net profit by 5.97% to Rs3,302 cr
07 November 2019
Tata Steel has reported consolidated net profit of Rs3,302 crore for fiscal second quarter ended 30 September 2019, a 5.97 per cent increase from the Rs3,116 crore profit in the year-ago quarter.
The company attributed this to one-time gains and a favourable tax regime. Tata Steel received a tax credit of Rs4,050 crore during the quarter against tax expenses of Rs 2,316.8 crore in the same period last fiscal.
Government’s tax measures helped Tata Steel and some subsidiaries in India save Rs2,425 crore during the quarter while the company gained Rs1,808 crore from recognition/reversal of deferred tax assets and liabilities in offshore subsidiaries.
Tata Steel, the country’s largest private steel maker, reported a 15.45 per cent drop in second quarter consolidated revenue from operations to Rs34,579 crore from Rs40,897 crore in the same quarter in the previous fiscal.
Standalone net profit rose 1.25 per cent to Rs3,400 crore, against Rs3,358 crore reported last year. “In India, steel production remained flat on quarter on quarter basis at 4.50 million tonnes in 2QFY20 due to the sharp slowdown in the automotive sector, particularly in the commercial vehicle segment," the company said in a press release.
Tata Steel produced 6.95 million tonnes of steel in the quarter, with Indian operations accounting for 4.5 million tonnes, compared to 6.73 million tonnes and 4.30 million tonnes, respectively, reported in the same period last year.
Earnings before interest, tax, depreciation and amortisation (EBITDA) from domestic operations during the quarter fell 45.97 per cent to Rs3,817 crore from Rs7,065 crore in Q2FY19. EBITDA per tonne of steel fell to Rs9,238 from Rs16,368 in the quarter, while consolidated EBITDA plummeted to Rs6,156 crore from Rs12,713 crore.
“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 minimise 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 steel demand," TV Narendran, CEO and MD of Tata Steel, said.
“Our acquisitions continue to stabilise and improve on their operating performance. Our Kalinganagar Phase 2 expansion programme is progressing well and we are prioritising the pellet plant for cost reduction and the CRM plant for value addition. We are also re-organising our India footprint in four verticals to drive scale, synergies and simplification which will create value for our stakeholders," he added.