Tata Steel's net profit soars 75% to Rs 918.57 crore in Q1

Tata Steel Q1 earnings: Tata Steel reported a significant 75 per cent rise in its consolidated net profit to Rs 918.57 crore for the quarter ending June 2024, driven by reduced expenses. The company had posted a net profit of Rs 524.85 crore in the same period of the previous fiscal year, according to an exchange filing.

The company's total income dropped to Rs 55,031.30 crore from Rs 60,666.48 crore a year earlier. However, Tata Steel successfully cut its expenses to Rs 52,389.06 crore from Rs 58,553.25 crore in the corresponding period of the previous year.

In India, Tata Steel's profit for the April-June quarter was Rs 3,335 crore, down from Rs 4,995 crore in the year-ago period.

The board has approved the acquisition of a 26 per cent stake in TP Parivart Ltd. Tata Steel will infuse up to Rs 35 crore in one or more tranches and execute a Share Purchase & Shareholders' Agreement (SPSA) with Tata Power Renewable Energy Ltd (TPREL) and its wholly-owned subsidiary TP Parivart Ltd (TPPL).

Additionally, the board has approved a proposal to infuse up to Rs 6,000 crore in Neelachal Ispat Nigam Limited (NINL), a subsidiary of Tata Steel, during FY25.

A scheme of amalgamation among Rujuvalika Investments Limited, a wholly-owned subsidiary of Tata Steel, and Tata Steel itself, along with their respective shareholders, has also been cleared by the board.

Tata Steel's CEO and Managing Director T V Narendran noted that subdued steel demand globally affected prices, while demand in India remained broadly stable despite election and heatwave impacts. The 5 MTPA expansion project at Kalinganagar is on track, with the blast furnace set to start in September 2024.

In the UK, operations at one of the blast furnaces (BF-5) at Port Talbot have ceased, with the remaining blast furnace slated to close by September 2024.

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

Koushik Chatterjee, Executive Director and Chief Financial Officer, highlighted that India revenues were around Rs 33,194 crore with an EBITDA of Rs 7,029 crore, translating to an EBITDA per tonne of Rs 14,227 and an EBITDA margin of 21 per cent.

Revenues from the Netherlands remained stable despite subdued demand, with operational improvements leading to better EBITDA. In the UK, planned blast furnace closures led to a steel stock build-up for downstream operations, impacting working capital. Tata Steel has committed to supporting affected employees with a package in Tata Steel UK, and the Voluntary Redundancy Aspiration process is ongoing.

"We are working closely with the recently elected UK government on the grant funding process for the new Electric Arc Furnace project and engaging with the Dutch government on support for the decarbonisation project," Chatterjee said.

"We continue to focus on growth in India, spending Rs 3,777 crore on capital expenditure during the quarter. Net debt stands at Rs 82,162 crore, with a strong group liquidity position of Rs 36,460 crore, including Rs 10,799 crore in cash and cash equivalents. We remain focused on cost optimisation, operational improvements, and working capital management to maximise cashflows," he added.

(With PTI inputs)