A poor show by Tata Steel's European subsidiary has once again offset a decent performance by the company's Indian operations in a tough operating environment.

The company's consolidated fourth quarter sales remained flat. This was primarily due to lower sales volumes at its European operations, which was mitigated by higher realisations.

Better prices though could not keep pace with expanding costs in a weak and over-supplied European market. This has dented Tata Steel's profits in the March quarter.

Total expenses rose by nearly five per cent outpacing sales growth of 0.5 per cent.

This contributed to the consolidated operating margins dipping four percentage points to six per cent.

The company's consolidated operating earnings (before interest, taxes and other income) dropped by 38 per cent. The traditionally strong Indian operations once again footed the bill for the high-cost European arm. Standalone operating profits for the Indian operations stood at Rs 2,700 crore.

However, the consolidated operating profit was lower by over Rs 600 crore at Rs 2,085 crore, due to the loss-making European arm.

The company's consolidated net profits (excluding exceptional items and income from associates) dipped by 90 per cent to Rs 203 crore.

A significantly higher tax bill (as a percentage of earnings before taxes) of Rs 976.6 crore hit net profits hard.

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