Global steel giant Tata Steel's consolidated net profit plunged by 70.38 per cent to Rs 337.33 crore in the April-June quarter, mainly due to Rs 1,577 crore write-down in a project.
Tata Steel group had reported a net profit of Rs 1,139.01 crore during the corresponding quarter in 2013-14 .
Net profit for the quarter came in at Rs 337 crores, affected by exceptional charges despite improved operating performances across all geographies, the company said in a statement.
Exceptional charges included "the non-cash write down of goodwill and other assets of Rs 451.25 crore and Rs 1,125.40 crore respectively in its joint venture Rio Tinto Benga (Mauritius Ltd)", according to a BSE filing by the company.
In July this year, Rio Tinto has reached an agreement for sale of Rio Tinto Coal Mozambique which includes the Benga project in which the company has 35 per cent stake, the statement said.
"The company undertook an impairment review exercise of its investment in the Benga project and Board approved a non-cash write-down of Rs 1,577 crore," it added.
During the quarter, the company had divested its entire stake in its joint venture Dhamra Port Company to Adani Ports and Special Economic Zone and exceptional charges also include profit of Rs 1,270.21 crore on sale of this non-current investment.
Net sales rose to Rs 36,143.27 crore in the quarter under review from Rs 32,558.61 crore a year ago.
Total expenses went up to Rs 33,704.92 crore from Rs 30,520.02 crore. Tax expenses trebled to Rs 1,080.41 crore during the quarter compared with Rs 351.39 crore in a year-ago period.
Finance costs shot up to Rs 1,252.37 crore during the quarter under review from Rs 992.44 crore a year-ago.
Tata Steel sold 6.46 million tonnes of steel in the first quarter, up from 6.08 million tonnes a year earlier.
"Operating performance improved across all geographies as Group EBITDA (earnings before interest, taxes, depreciation and amortisation) for the first quarter ended June 30, 2014 rose to Rs 4,325 crore from Rs 3,755 crore the year before," the statement said.
"Tata Steel's profitability has improved in key geographies with Indian and European operations registering EBIDTA margin expansions as compared to the last year.
"Despite significant capex spend during the quarter, mainly for the greenfield project in Odisha, we were able to reduce the net debt," said Koushik Chatterjee, Group Executive Director (Finance and Corporate).
In the April-June quarter, mining operations in Odhisa were suspended for a fortnight on interim orders by the Supreme court leading to disruptions in ore availibity to Jamshedpur facility, the statement said.
Chatterjee said the company continued to pursue "its strategy of monetising its non-core assets as demonstrated by the sale of its stake in Dhamra Port".
"We have recently issued a dual-tranche debut USD bond of USD 1.5 billion to diversify our capital base and increase debt maturity," he added.
Managing Director T V Narendran said the economic sentiment has improved in India after the general elections and the "new government has been clearly communicating its intentions bring the economy back to the growth path."
The shares of the company closed at Rs 534.70 apiece on the BSE, down 1.33 per cent from the previous close.