Tata Steel, one of India’s largest steelmakers, posted a massive rise in consolidated net profit at Rs. 12,548 crores in the second quarter, 7.5 times the Rs. 1,665 crores recorded in the same period last year. In the first quarter of this financial year, Tata Steel registered a profit of Rs. 9,768 crores.
The size of Tata Steel’s profitability will be clear when compared with Reliance Industries at Rs. 13,680 crores in the second quarter. Reliance’s profits are from three different businesses – refining and petrochemicals, telecom and retail. Another comparison is TCS, the second-largest company in India by market value. Tata Steel’s profit is nearly Rs. 3,000 crores more than that of TCS (Rs. 9,624 crores in Q2).
The steelmaker’s consolidated turnover at Rs. 60,283 crores has risen steeply from Rs. 38,940 crores a year ago. In the first quarter, the company had posted turnover of Rs. 53,372 crores. The rise in revenue and profit are primarily because of high prices of steel. However, there have been concerted efforts from the Tata management to improve operational performance. The company has added greenfield capacities and acquired bankrupt firm Bhushan Steel and Usha Martin’s steel businesses. The turnaround of the European business is another focus area of the management. They sold off underperforming NatSteel Singapore.
Mr. T. V. Narendran, Chief Executive Officer & Managing Director, said: “Tata Steel has delivered strong results across key geographies in this seasonally weaker quarter. Our steel deliveries in India expanded by 11% despite a contraction in market demand which is a testament to the strength of our franchise. We continue to drive value accretive growth in our chosen segments and our performance in key segments such as auto was very robust despite the sector being impacted by the semiconductor shortage. Our European operations have also delivered robust performance underpinned by strong improvement in realizations. We are watchful of the elevated coal prices and high energy cost as key risks to margins going forward.
We took another step in our sustainability journey and commissioned 5 TPD CO2 capture plant at Jamshedpur; first in India by a Steel company to extract CO2 directly from Blast Furnace gas. We continue to progress on our stated goals of expanding and consolidating our operations in India. Our 5 MTPA TSK phase II expansion including the pellet plant and CRM complex is progressing well and the merger of Tata Steel BSL with Tata Steel will be completed shortly. We have recently won the high quality Gandhalpada iron ore mines which helps us achieve raw material security beyond 2030. In line with our capital allocation strategy, we recently exited our operations in Singapore through the sale of NatSteel.”
Mr. Koushik Chatterjee, Executive Director and Chief Financial Officer: “Tata Steel posted its highest ever underlying quarterly performance with EBIDTA and Profit after Tax of Rs. 16,618 crores and Rs. 12,548 crores on the back of strong operating and market performance across all geographies including Europe. This translates into a consolidated EBIDTA Margin of 27.6% and PAT margin of 20.8% for the quarter. The operating cash flows continue to be strong despite working capital pressure due to price effect on coal price increase in recent months. We signed and closed the divestment of our 100% holding in NatSteel Holdings in this quarter to realise around Rs. 1,200 crores that resulted in a realised gain of Rs. 720 crores for the quarter.
As part of our enterprise strategy, we continue to deploy the free cash flows for de-leveraging the balance sheet with Rs. 11,424 crores of debt repayment in the first half of the current financial year and are targeting additional, aggressive deleveraging in the second half as well. The financial metrics of the company are now at investment grade levels and we are happy to note that the Standard & Poor has upgraded Tata Steel to investment grade level of BBB-.”