DSIJ Mindshare

Tata Steel Q1FY15 Result In Line With Expectation

On consolidated basis, net profit of Tata Steel declined by huge 70.4% on yearly basis. Net profit posted by the company for Q1FY15 was Rs 337.33 crore against Rs 1139.01 crore posted in the corresponding quarter of previous year. The reasons for such drop in the profit are exceptional items, higher tax expenses and rise in finance cost.
For April-June 2014 quarter, the company had exceptional loss of Rs 262.48 crore against gain of Rs 17.76 crore in the same quarter previous year. This loss was after considering provisions for impairment of non-current assets to the tune of Rs 1576.65 crore in the quarter and profit on sale of non-current investments of Rs 1314.17 crore. The company that carries debt of little more than Rs 70000 crore in its books saw its interest expense going up by 26% on yearly basis to Rs 1252 crore for Q1FY15. 
On consolidated basis, the company saw its operating income increasing by 11% to Rs 36143.27 crore for the first quarter of FY15. This increase was on the back of higher realisation and better volumes. Steel deliveries have increased by 6.25% on yearly basis to 6.46 million tonnes for Q1FY15.
India Operation

India's operation of Tata steel continues to exhibit robust performance and its turnover increased by 10.7% on yearly basis to Rs 10468 crore, up from Rs 9455 crore posted in first quarter of FY14. Deliveries in Q1FY15 increased to 2.1 million tonnes versus 2 million tonnes in Q1FY14. EBITDA for Q1FY15 came at Rs 3266 crore, a jump of 13% on yearly basis. Net profit in Q1FY15 was Rs 2268 crore compared to Rs 1356 crore in Q1 FY'14. Profits included exceptional gains of Rs 788 crore from the sale of the stake in the Dhamra Port Company.
Europe

European operations of Tata Steel improved on yearly basis wherein the production remained stagnant while deliveries increased marginally by 2% to 3.2 million tonnes in Q1FY15. The real improvement was visible at the EBITDA level, which increased by 28% to Rs 995 crore for Q1FY15. Even EBIDTA per tonne came above USD 50. 

Overall the financial numbers posted by the company were in line with the street expectations and going forward company's performance will largely depend upon how the European operations pan out and the way company manages its debt. 

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