Tata Steel net profit jumps 75% to Rs 918.57 crore in Q1; India profit dips to Rs 3,335 crore

Steel major Tata Steel on Wednesday reported a 75 per cent rise in its consolidated net profit at Rs 918.57 crore in June 2024 quarter as the company managed to reduce its expenses.
It had reported a net profit of Rs 524.85 crore during the April-June period of preceding 2023-24 fiscal, the company said in an exchange filing.

The total income fell to Rs 55,031.30 crore in the reporting period from Rs 60,666.48 crore a year ago.

During the quarter under review, the company reduced its expenses to Rs 52,389.06 crore from Rs 58,553.25 crore in the same period a year ago.

In India, the company reported a profit of Rs 3,335 crore during the latest April-June quarter, down from Rs 4,995 crore in the year-ago period.

Meanwhile, the board of the company gave approval to acquisition of a 26 per cent stake in TP Parivart Ltd.

As part of the plan, the company said it will infuse, in one or more tranches, up to Rs 35 crore and execute a Share Purchase & Shareholders' Agreement (SPSA) with Tata Power Renewable Energy Ltd (TPREL) and its wholly-owned subsidiary TP Parivart Ltd (TPPL), to acquire and hold 26 per cent equity stake in TPPL.

The board also approved the proposal to infuse funds, in one or more tranches, up to Rs 6,000 crore, by way of subscription to equity shares of Neelachal Ispat Nigam Limited (NINL), subsidiary of the company, during FY25.

Besides, the board has cleared the scheme of amalgamation amongst Rujuvalika Investments Limited, a wholly-owned subsidiary of the company, as well as Tata Steel and their respective shareholders, the filing said.

In a separate statement, Tata Steel's Chief Executive Officer & Managing Director T V Narendran said during the quarter, subdued steel demand across most regions weighed on global steel prices. In India, steel demand was broadly stable despite some impact due to elections and heatwaves.

The 5 MTPA expansion project at Kalinganagar is on track for the blast furnace to start in September 2024. The heating process for blast furnace stoves and coke oven batteries has commenced as planned, he said.

In the UK, the company ceased operations at one of the blast furnaces (BF-5) at Port Talbot and it's on track to close the remaining blast furnace by September 2024.

"Tata Steel has launched the first carbon bank in India. Further, Tata Steel also recently deployed the first-ever crew of female firefighters in the Indian steel industry," he added.

Koushik Chatterjee, Executive Director and Chief Financial Officer, Tata Steel, said India revenues were around Rs 33,194 crore and EBITDA was Rs 7,029 crore, which translates to an EBITDA per tonne of Rs 14,227 and an EBITDA margin of 21 per cent.

Revenues from the Netherlands were broadly stable despite subdued demand dynamics, but cost profile continued to improve with stabilisation of operations leading to improvements in EBITDA.
Given the planned closure of blast furnaces in the UK, there has been steel stock build-up for the downstream operations which impacted working capital. Tata Steel is committed to supporting affected employees, and has offered a package in Tata Steel UK.

"The Voluntary Redundancy Aspiration process was launched on 10th July and will close on 07th August. We are working closely with the recently elected UK government on finalisation of grant funding process for the new Electric Arc Furnace project. We have also started active engagement with the government in Netherlands on support for the decarbonisation project," the CFO said.

"We continue to focus on growth in India and have spent Rs 3,777 crores on capital expenditure during the quarter. Net debt stands at Rs 82,162 crores. Group liquidity position remains strong at Rs 36,460 crores, which includes Rs 10,799 crores of cash and cash equivalents. We also remain focused on cost optimisation, operational improvements and working capital management to maximise cashflows," Koushik said.