Tata Steel returned to the black with a profit after tax of Rs 522 crore in the third quarter (Q3) of the fiscal compared with a loss of Rs 2,502 crore in the same period of the last fiscal even as the European business continued to heavily weigh on the consolidated balance sheet of the company.
The Tata Steel India business, which reflects the merger of three listed and two unlisted subsidiaries, reported PAT of Rs 4,429 crore in the quarter ended December 31, compared with PAT of Rs 1,786 crore a year ago.
However, the UK and Netherlands operations, which posted EBDITA losses of Rs 1,657 crore and Rs 1,215 crore, respectively, yet again dragged the overall performance of the company down during the period.
On a consolidated level, the revenues were down 3.1 per cent to Rs 55,312 crore in Q3, while deliveries were flat at 7.15mt. India turnover was marginally up 2.8 per cent to Rs 35,011 crore, while deliveries were up to 4.88mt.
Commenting on the results, T.V. Narendran, chief executive officer and managing director of Tata Steel, said the global operating environment was complex with the economic slowdown in China and geopolitics weighing on commodity prices in general.
China exported 7-8mt steel every month, the highest since 2015, adversely affecting steel prices and profitability.
“Despite this context, Tata Steel India has delivered better margins aided by higher deliveries as well as realisations on a QoQ basis. Our domestic deliveries for the quarter stood at 4.78 million tonnes and were up 3 per cent QoQ and 10 per cent YoY,” Narendran said.
The company said it has started commissioning a 5mt expansion of the Kalinganagar plant in Odisha. It has spent Rs 4,715 crore on capital expenditure during the quarter and Rs 13,357 crore for the nine months ended December 31, 2023.
Koushik Chatterjee, executive director & CFO of Tata Steel, noted margins increased by 300 basis points quarter-on-quarter even as subdued demand dynamics weighed on margins in the UK and Netherlands. “The UK business continues to face production shortfalls arising from the end-of-life condition of several of its heavy end assets. In the Netherlands, we expect BF#6 to restart by the end of January,” he said.
On January 19, Tata Steel announced the closure of the Port Talbot operations in 2024-25 and building of an electric arc furnace by 2027, cutting 2,800 jobs. Tata Steel proposes to commit more than £130 million to a comprehensive support package for the affected employees.