Mumbai:  Tata Steel Ltd’s consolidated net profit in quarter ended Mar 31 were mostly in line with expectation at 10.36 bln rupees against net loss of 65.28 bln rupees in the year-ago period.

The steel major’s net sales beat analysts’ estimates and grew 22.79% on-year to 420.18 bln rupees on the back of higher volumes across geographies.

Steel order deliveries for the consolidated entity in Jan-Mar rose 16% on-year to 7.62 mln tn.

According to an average of estimates of 11 brokerages, Tata Steel was expected to report consolidated net profit of 10.47 bln rupees on net sales at 400.2 bln rupees for Jan-Mar.

Tata Steel’s consolidated other income in Jan-Mar stood at 1.12 bln rupees. In the corresponding period a year ago, the company had incurred other expenditure of 678.6 mln rupees.

Total expenditure during the quarter rose 22.5% on-year to 388.9 bln rupees led by a 44% rise in input costs to 126 bln rupees. Input costs as a  percentage of net sales rose to 30.0% in Jan-Mar from 25.6% a year ago.

Finance costs rose 17.5% year-on-year to 11.69 bln rupees. “Our focus remains on increasing value added downstream operations and delivering quality and innovative products and services across all verticals of our business,” Managing Director T.V. Narendran was quoted as saying in a company release.

The management’s top priority is the commissioning of the company’s plant in Kalinganagar, Odisha. It expects the plant to be commissioned by Jan-Mar 2015-16. As on Mar 31, Tata Steel’s net debt stood at 673.26 bln rupees and cash and cash equivalent at 113.73 bln rupees.
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TATA EUROPE

Tata Steel’s European operations saw a fall in operating profit margins, as fall in raw material costs during the quarter decreased the company’s pricing power, said Karl-Ulrich Kohler, Tata Steel Europe’s managing director and chief executive officer.

The decline in raw material costs translates to cheaper raw material for the company with a lag of around five-six months, he said.

Revenues from the European segment rose to 243.76 bln rupees in Jan-Mar from 191.66 bln rupees a year ago. This segment accounts for a major chunk of the consolidated operating profit and over half the revenues.

Tata Steel Europe’s steel deliveries in Jan-Mar rose 19% on-year to 4.07 mln tn. Liquid steel production during the quarter was up 3% at 4.04 mln tn.

The company expects steel consumption of the European Union to remain at historically low levels in the backdrop of global overcapacity.
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INDIA OPERATIONS
On a standalone basis, the company reported a 51.1% on-year rise in net profit to 19.79 bln rupees, aided by a 237-basis-point increase in earnings before interest, tax, depreciation and amortisation margin.

Net sales rose 13.1% on-year to 120.42 bln rupees, as steel order deliveries increased to 2.41 mln tn from 2.07 mln tn last year.
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OUTLOOK
Market conditions in India are currently stable and the steel demand scenario is expected to improve after October, Group Executive Director – Finance and Corporate, Koushik Chatterjee said.

On the European front, the company expects to see a 3.9% growth in Apr-Jun as activity in sectors such as automobiles and construction is increasing.

Today, shares of Tata Steel ended at 452.35 rupees on the National Stock Exchange, up 5.9% from the previous close.

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