Tata Steel has reported that its net profit in the September quarter plunged to ₹1,297 crore against ₹12,548 crore logged in the same period last year, largely due to higher cost and lower realisation from high-cost inventory.
Revenue from operations was down a tad at ₹59,878 crore (₹60,387 crore).
Expenses jumped 22 per cent to ₹57,684 crore (₹47,240 crore) on the sharp rise in raw material costs at ₹27,977 crore (₹17,762 crore) and finance cost increased to ₹1,519 crore (₹1,020 crore).
EBITDA dipped to ₹5,817 crore (₹17,810 crore), with EBITDA per tonne dropping to ₹8,045 crore (₹24,112 crore).
The use of high-cost raw material and steel inventory coincided with a drop in realisations, resulting in margin decline across geographies.
Overall production was down to 7.56 million tonnes (7.77 mt), and sales fell to 7.23 mt (7.39 mt).
The company restarted production at the recently acquired Neelachal Ispat Nigam’s blast furnace in October, within three months of its completion of the acquisition. The output is ramped up and expects to commission the 6 mtpa pellet plant in December quarter.
Tata Steel has started work on setting up a 0.75 mtpa Electric Arc Furnace in Punjab, which will leverage the growth in the construction segment.
In India, the turnover was down at ₹34,114 crore (₹34,324 crore) while the EBITDA plunged to ₹3,929 crore (₹13,877 crore) and EBITDA per tonne was down at ₹7,997 (₹30,272).
Gross debt increased to ₹87,516 crore (₹82,597 crore). It paid ₹19,000 crore in the September quarter to complete the Neelachal Ispat acquisition. Net debt was at ₹71,753 crore.
TV Narendran, Managing Director, Tata Steel, said the concerns of a slowdown in key economies, persisting geopolitical issues coupled with seasonal factors led to a volatile operating environment.
The company will set up more electric arc furnaces in the country, enabling capacity augmentation, and along with NINL expansion, will drive growth in the high-margin retail business, he said.
In Europe, the EBITDA was at ₹1,788 crore (₹3,340 crore), translating to an EBITDA per tonne of ₹9,540 (₹15,609). Energy costs in Europe continue to remain a key watchpoint, said the company.