Mumbai: A one-time gain of Rs 1,147 crore on account of proceeds from land sale helped Tata Steel post 37 percent rise in consolidated net profit at Rs 1,254.33 crore for the second quarter ended September 30, 2014-15.
Its profit was Rs 916.77 crore in the July-September quarter of 2013-14.
The profit before exceptional item and tax stood at Rs 1,302 crore, from Rs 1,398 crore.
Tata Steel's total income declined to Rs 35,777 crore in the second quarter of 2014-15 from Rs 36,645 crore a year ago. Expenses also fell to Rs 33,564 crore from Rs 34,384 crore.
Hot metal and crude steel production in Indian operations reached 2.58 million tonnes and 2.27 MT respectively in Q2 FY'15. Saleable steel production increased to 2.2 MT. The deliveries increased to 2.11 MT versus 2.04 MT in Q2 FY'14.
Indian operations reported stable performance despite weak monsoon. European operations maintained the level of year-on-year improvement in financial performance that was established in the first quarter. Production and deliveries were higher than the first quarter, despite extended summer shutdowns, the company said here.
"Despite subdued market conditions, the company has registered an all-around growth in H1 with an increase in both, saleable production and deliveries. Our strategy of focusing on the auto segment, particularly the high-end segment, and the retail market yielded rich dividends," Tata Steel India and South East Asia Managing Director T V Narendran told reporters here.
He said: "Our focus on product mix enrichment has resulted in a 22 percent y-o-y increase of sales to the automotive segment and a 38 percent y-o-y increase in the hi-end segment.
"We are hopeful that the stable political climate will trigger a steel-intensive economic revival and we are well positioned to take advantage of any improvement in the steel demand in the country."
The company's Group Executive Director (Finance and Corporate) Koushik Chatterjee said: "Despite several challenges in the market and the environment, the Tata Steel Group was able to maintain its profitability levels during the quarter. The company generated around Rs 4,400 crore of cash flows from operations that was deployed primarily in the ongoing capital expenditure programme helping us marginally decrease the net debt levels."
The company has also significantly de-risked the balance sheet with the completion of the refinancing of the international debt portfolio at better than before terms and long tenured repayments.
Chatterjee said that while the Group continues to focus on internal improvement initiatives, there are several external factors that continue to put challenges to the business, especially declining spreads in Europe and South East Asia due to Chinese exports.
He said lower commodity prices and the uncertainty created on the renewal of mines in India due to various hurdles has the potential to impact the company if not resolved urgently.
In the European operations, the company is combating the twin challenges of sluggish economic growth and rising imports. The Q2 FY15 turnover was Rs 20,202 crore compared to Rs 21,149 crore in Q2 FY14. The EBITDA was higher at Rs 929 crore in Q2 FY 15 as compared to Rs 554 crore in the previous year.
Karl-Ulrich Kohler, MD & CEO of Tata Steel in Europe, said: "Our financial performance again showed how our product portfolio enhancement continues to build on the progress we've made so far. We are on track with our new product launch plans and with our programme to raise the proportion of differentiated products in our sales.
"The potential sale of our Long Products Europe business and its associated distribution facilities would enable us to devote greater resources to pursuing our focus on strip steel customers. We will treat affected employees fairly and with respect throughout the due diligence process, and will consult fully with their representatives," Karl said.
He added: "We see headwinds constraining steel demand growth globally. In Europe we are increasingly concerned about the impact of rising imports, particularly from China, on EU steelmakers."
Commenting on mining update, Narendran said the company has been operating its mined in Orissa and Jharkhand with all statutory clearances such as environmental clearances, forest clearances and consent to operate. The company had also submitted the applications for renewal of its mines well before the expiry of the leases.
In Jharkhand, the applications for the renewal of the mining leases were made much ahead of its renewal date in compliance with law. However, the state government has issued stop mining order in September.
In response to the company's petition to the High Court of Jharkhand, the state government has informed the Court on November 7 that it has taken the decision to renew the leases of the company. The matter is pending before the High Court of Jharkhand, Narendran said.
Due to uncertain regulatory environment, the company started importing iron ore since February. It has imported 2.2 million tonnes of iron ore in the first seven months of the current year, he said.
The subdued performance led Tata Steel scrip to slip by 2.38 percent at Rs 468.30 on the BSE today.
