Tata Steel net doubles on gain from deferred tax

Economic gloom, weak quarter fail to dent India operations

Tata Steel posted a consolidated net profit of Rs 1,139 crore for the quarter ended June, more than double the profit in the corresponding period last year. A one-time deferred tax gain at Corus helped the company beat analyst estimates.

Analysts had expected the company’s net profit to decline year-on-year due to weak realisations from domestic, as well as international businesses, and an increase in foreign exchange losses.

Deferred tax stood at Rs 415 crore, against the Rs 188-crore tax outgo in the year-ago period. A marginal drop in the company’s expenses boosted net profit. During the quarter, net sales stood at Rs 32,550 crore, compared with Rs 33,547 crore in the corresponding period last year. Steel deliveries stood at 6.08 million tonnes (mt), against 5.68 mt in the year-ago period.

Tata Steel’s Indian operations recorded a robust performance, despite weakening economic conditions and a seasonally weak quarter, the company said. European operations also improved, owing to upgrades at key production facilities at Port Talbot in the UK and IJmuiden in the Netherlands, it added. Tata Steel Europe, formerly Corus Group, Europe’s second-largest steel producer, saw a decline in demand in the region. In 2007, Tata Steel had acquired Corus for $13 billion.

Tata Steel’s Southeast Asian operations were hit by a two-month shutdown at a plant due to upgrades, the company said. The operations had resumed this month, it added. Despite the challenging business environment, the company’s earnings before interest, tax, depreciation and amortisation margin rose to 11.33 per cent from 10.14 per cent in the year-ago period. As on June 30, the company’s cash and cash equivalents stood at Rs 10,178 crore, while net debt was Rs 61,289 crore.