Without the favourable tax, the firm’s operating performance was dismal as its comparable/adjusted Ebitda stood at Rs 4,018 crore, versus Rs 8,641 crore in the same period last year.
During the quarter under review, the company had a favourable tax impact of Rs 4,233 crore, of which Rs 2,425 crore was due to adoption of the new corporate tax rate by Tata Steel
(standalone) and some of its subsidiaries in India. Also, Rs 1,808 crore was on account of recognition/ reversal of deferred tax assets (DTA) and liabilities in offshore subsidiaries.
These lent support to the bottom line as the company reported a consolidated net profit of Rs 3,302 crore in the September quarter, up 6 per cent from the corresponding period last year.
According to Bloomberg estimates, the company’s net sales was seen at Rs 34,476 crore in the September quarter, while its bottom line was expected to be at Rs 338 crore.
Consolidated adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) margin stood at 11.6 per cent in the quarter gone by with Ebitda per tonne at Rs 6,155. For the India business, despite the challenging environment, Ebitda margin was comparatively healthy at 22.4 per cent with Ebitda per tonne at Rs 11,200. Considering the weak demand scenario, the management said it has reduced capex guidance for FY20 to Rs 8,300 crore from Rs 11,000 crore earlier and that the capex could see a sharper recaliberation, going ahead, depending on the market condition. As on September 30, the company’s net debt stood at Rs 1,06,952 crore and gross debt was at Rs 1,11,549 crore.
“While our gross debt increased during the quarter due to an increase in working capital, we have renewed our focus on cash flow maximisation through operational improvements, working capital reduction and rationalisation of capex which will help us deleverage,” said Koushik Chatterjee, executive director and chief financial officer.
During the quarter, the company tied up $525 million of foreign currency loans which will help lengthen the debt maturity profile. The company said its liquidity position continues to be strong with cash balance of Rs 4,596 crore and unutilised bank lines of Rs 7,262 crore.
had plans to lower debt by $1 billion for FY20 and has repaid euro 370 million so far. While the management informed that it will not be able to meet the $1 billion repayment target this year, repayment of a similar tranche (of close to euro 370 million) could take place by January-February 2020.
In the September quarter, Tata Steel Europe’s liquid steel production was impacted by weak market conditions, planned summer shutdowns and unplanned outages.
Tata Steel Europe has launched a transformation programme to make operations simpler, leaner and sustainable for long-term success, it said.