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Tata Steel Q2 profit rises 6% to Rs 3,302 crore on tax gain, revenue down 15%

BusinessToday.In     November 6, 2019

Tata Steel on Wednesday reported 5.97 per cent year-on-year (YoY) growth in its consolidated net profit at Rs 3,302.31 crore for the second quarter ended September 30, 2019, driven by one-time deferred tax gain of Rs 4,365.33 crore.

"The steel major had posted a consolidated net profit of Rs 3,116.20 crore in the same quarter last fiscal," Tata Steel said in a filing to the Bombay Stock Exchange.

Consolidated revenue fell 15.44 per cent to Rs 34,579.18 crore in July-September quarter of the current fiscal as against Rs 40,897 crore in the year-ago period, the Tata group company said in a regulatory filing.

Consolidated profit of India business stood at Rs 3,400 crore, while revenue stood at Rs 20,204 crore.

"During the quarter, the company had a favourable tax impact of Rs 4,233 crore, of which Rs 2,425 crore was on adoption of the new corporate tax rate by Tata Steel Standalone and some subsidiaries in India and Rs 1,808 crore was on account of reversal of deferred tax assets and liabilities in offshore subsidiaries," Tata Steel said in the exchange filing.  

The steel maker's EBITDA (Earnings before Interest, Tax, Depreciation and Amortization) tumbled 56.60 per cent to Rs 3,819.60 crore in July-September period of this fiscal as against Rs 8,801.40 crore in the same period last year.

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Consolidated steel production stood at 6.95 million tons, while deliveries grew by 3 per cent quarter-on-quarter (QoQ) to 6.53 million. India steel production remained flat on QoQ basis at 4.50 million tons, while steel deliveries grew 4 per cent QoQ to 4.13 million tons in 2QFY20.

In 2QFY20, Tata Steel Europe liquid steel production was impacted by weak market conditions, planned summer shutdowns and unplanned outages. Revenue from operations decreased to Rs 14,035 crore in 2QFY20 due to weaker steel prices, while sales volumes increased by 1.2 per cent QoQ to 2.29 million tons.

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Commenting on Q2 earnings, Tata Steel CEO & Managing Director, T V Narendran said: "The business environment in India and other geographies continued to be challenging and weighed heavily on steel prices... 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 the steel demand," he added.

As of September 2019, Tata Steel's gross debt was Rs 1.12 lakh crore, while net debt stood at Rs 1.07 lakh crore.

Ahead of Q2 results, shares of Tata Steel closed trade at Rs 404.35, up 0.09 per cent, on the BSE on Wednesday.

Edited by Chitranjan Kumar

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