India’s Tata Steel Q2 profit rises 22 pct, beats forecasts

Tata Steel today reported a 22 percent rise in consolidated net profit at Rs 1,528.71 crore in the September quarter aided by better sales in the auto and value added products category as well as sale of investments.

Its Europe business continued to be a drag on its overall business.

As of 10.38 a.m., Tata Steel’s shares traded 3.28 per cent lower at Rs 218.25 apiece compared to 0.12 per cent fall in the broader Nifty.

Aban Offshore: Offshore drilling contractor Aban Offshore reported 16.33 per cent decline in its consolidated net profit at Rs 124.45 crore for the second quarter ended September 30.

But profit was helped by 28bn rupees earned from the sale of investments during the quarter, Tata said. “Market conditions in Europe, primarily in the United Kingdom, significantly worsened in the quarter as the United Kingdom continues to witness surge in imports and declining competitiveness of the manufacturing sector due to weak industrial demand, strengthening of the sterling pound and adverse regulatory and business conditions”, a statement issued by Tata Steel after market hours on Thursday said. “While we welcome the recent support extended by the government through increase in import levies, the deteriorating global demand-supply equation threatens to negate the benefits of the same”.

The South-east Asian operations continue to be impacted by rising imports from China, he said. “We are making good progress on our 3MTPA greenfield expansion Project at Kalinganagar”.

In the first half to September 30, the company has monetised assets for about Rs 4, 200 crores, said Koushik Chatterjee, group executive director told journalists. Of this amount, a Rs 7,772 crore charge was on account of its strip operations in Europe, mostly those in the United Kingdom, the company said.

Tata said the “rapid and sharp deterioration in the underlying business environment in the UK” and the restructuring of its British businesses had resulted in the group taking an £866m non-cash impairment charge. “The company also successfully restructured the British Steel Pension Scheme and completed Triennial valuation of the scheme”, Chatterjee says.

“Operating result has turned negative this year, reflecting huge challenges the global steel industry is facing”. The consequential treatment of the same has been incorporated in the consolidated financial statements of the firm as a one time credit of Rs 8,570 crore during the September quarter. “Despite incurring a capital expenditure of Rs 5,800 crore in the last six months, the gross debt has been stable and the company has reduced its net leverage levels by around Rs 3,000 crore compared to the previous quarter end”.