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Tata Steel's Ebitda plunges 56%; key Q2 takeaways

Margins declined sharply to 11 per cent from 21.50 per cent on a yearly basis.|
Nov 06, 2019, 07.54 PM IST
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India steel production remained flat on a quarter-on-quarter basis at 4.50 million tonnes.
Mumbai: India’s largest private steel maker Tata Steel on Wednesday reported 6 per cent rise in consolidated profit for the September quarter at Rs 3,302.31 crore on the back of one-time deferred tax gain of Rs 4,365.33 crore.

Consolidated Ebitda plunged 56.60 per cent to Rs 3,819.60 crore in the quarter, the company said in a filing to the exchange after market hours.

Total revenue also declined 15.44 per cent to Rs 34,579.18 crore during the quarter.

Ahead of the earnings announcement, Tata Steel’s shares closed 0.09 per cent higher at Rs 404.35 on BSE, while BSE Sensex settled 0.55 per cent higher at 40,469.78.

Here are the key takeaways:

Margins slump
Margins declined sharply to 11 per cent from 21.50 per cent on a yearly basis.

Favorable tax impact
The company had a favorable tax impact of Rs 4,233 crores, of which Rs 2,425 crore was on adoption of the new corporate tax rate by Tata Steel and some subsidiaries in India and Rs 1,808 crores was on account of recognition/reversal of deferred tax assets and liabilities in offshore subsidiaries.

Decline in steel prices
During the quarter, economic growth across geographies slowed down as trade frictions outweighed accommodative monetary policies across key markets, the company said. It pointed out that over the last year, steel prices declined by more than $100 per tonnes in key geographies amidst weak demand.

Challenging business environment
In India, economic activities remained soft, largely due to persistent liquidity issues, weakness in investment and consumption sentiment, and seasonal impact with heavy and prolonged monsoons. During the quarter, Indian steel players grappled with declining margins as domestic steel prices corrected sharply amidst continued demand weakness and high inventories.

In Europe, rising trade protectionism and overhang of Brexit continued to weigh on business confidence. Steel demand remained under pressure with continued weakness in key steel consuming sectors during the quarter.

Flat Indian operations
India steel production remained flat on a quarter-on-quarter basis at 4.50 million tonnes. Indian steel deliveries grew 4 per cent to 4.13 million tonnes. India revenue from operations for the quarter stood at Rs 20,204 crore.

Weak European business
Revenue decreased to Rs 14,035 crore due to weaker steel prices, partially offset by the marginally better steel volumes. Sales volume increased by 1.2 per cent quarter to quarter to 2.29 million tonnes.
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