Tata Steel surges on turnaround in Q2

Tata Steel rose 3.11% to Rs 370 at 10:48 IST on BSE after the company reported a consolidated net profit of Rs 916.77 crore in Q2 September 2013 as against net loss of Rs 363.93 crore in Q2 September 2012.

The Q2 result was announced after market hours on Wednesday, 13 November 2013.

Meanwhile, the S&P Sensex was up 344.49 points or 1.71% at 20,538.89.

On BSE, 10.06 lakh shares were traded in the counter as against average daily volume of 10.78 lakh shares in the past two weeks.

The stock hit a high of Rs 370.95 and a low of Rs 359 so far during the day.

Tata Steel's consolidated revenue rose 7.35% to Rs 36645 crore in Q2 September 2013 over Q2 September 2012. EBITDA (earnings before interest, taxation, depreciation and amortization) jumped 54.26% to Rs 3784 crore in Q2 September 2013 over Q2 September 2012.

Tata Steel attributed the turnaround in Q2 September 2013 to steady ramp-up of the Indian operations and improved performance at the European and South East Asian operations.

Mr T V Narendran, Managing Director of Tata Steel India and South East Asia, said: "Overall market conditions weakened during the last quarter, exacerbated by heavy monsoons and the credit slowdown affecting our customers. Despite these difficult conditions, we were able to increase deliveries by 18% over last year and increase market share on the back of strong customer relationships, our superior product portfolio and the strength of our distribution network. The rolling facilities of the brownfield expansion at Jamshedpur ramped up to full capacity towards the end of the second quarter. Our greenfield project in Odisha continues to make good progress though there have been some weather related disruptions due to the Phailin cyclone and the subsequent floods. The South East Asian operations have stabilised and should deliver strong performance over coming quarters."

Dr Karl-Ulrich Kler, MD & CEO of Tata Steel in Europe said: "The improvement in production continued into the second quarter as our operations stabilised following the restart of the Port Talbot blast furnace. This fed through to a stronger financial performance in the first half, despite margins being squeezed in the September quarter. The investments in our asset base are proving their worth in what continues to be a challenging market. We are focused on maintaining our momentum and will continue to strengthen partnerships with customers by offering them more premium products and services."

Mr Koushik Chatterjee, Group Executive Director (Finance and Corporate) said: "The Tata Steel Group continued to maintain its earnings momentum in spite of seasonal weakness in Europe. The year-on-year improvement is evident with a 300 basis points increase in the Group EBIDTA compared to the corresponding quarter of the previous year. The Group cash flows from operations for the quarter were also very strong as we continued to focus on internal initiatives including working capital and spend management. Capital expenditure on the greenfield capacity in Odisha remains the key priority for the Group's capital deployment and we have spent around Rs 4500 crore in the first half on this project. We continue to maintain adequate liquidity levels backed by project financing for the planned capex and track the currency movements to calibrate our hedging policy accordingly."

Tata Steel's cash and cash equivalents as on 30 September 2013 stood at Rs 12779 crore and net debt was Rs 64334 crore. Total liquidity including undrawn credit lines was Rs 17500 crore.

Tata Steel is a top ten global steel maker and the world's second most geographically diversified steel producer.

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