Mumbai: Tata Steel Ltd. swung to a profit in the third quarter, the first gain in five periods, boosted by a recovery in product prices and higher production.
Group net profit was Rs230 crore in the three months to 31 December from a loss of Rs2,750 crore a year earlier, according to a statement from the Mumbai-based company Tuesday. Revenue for the quarter was Rs29,390 crore, compared with Rs25,770 crore a year earlier.
Global mills such as South Korea’s Posco and India’s JSW Steel Ltd. have seen profits jump after steel prices advanced because of government stimulus in China, the world’s biggest consumer. At the same time, a ramp up in capacity in India saw volumes increase, boosting sales of local mills.
Total costs advanced 3.9% to Rs27,230 crore, while finance costs rose 41% to Rs1,390 crore, the company said. Net debt was Rs76,680 crore while cash and cash equivalents were about Rs15,000 crore, it said.
“The financial performance reflects strong underlying operating performance across the group in spite of a seasonally slow quarter in Europe,” group executive director Koushik Chatterjee said in the statement. “While there were challenges on the working capital levels due to increased prices of both raw materials and finished goods especially in Europe, the company has been able to maintain its overall debt level at the end of the quarter.”
The company also named N. Chandrasekaran as chairman of the board after parent company Tata Sons Ltd. ousted former chairman Cyrus Mistry in October. A bitter, public fight between scion Ratan Tata and Mistry—who continues to battle his ouster in court—has roiled the group for months.
In December, the company struck a deal with unions to secure future production and jobs at its Port Talbot plant in Wales and other UK sites. As part of the deal, Tata said it will consult the unions on closing its British Steel Pension Scheme and replacing it with a defined contribution plan.
“The strategic initiatives in the UK on the pensions continue to be an important priority for the company and we welcome the Unions recommendation to its members to support the ballot process that is currently on to close the BSPS to future accruals,” Chatterjee said on Tuesday.
In November, Tata also said it had started talks for the sale of its UK specialty steels business to Liberty House Group business for $124 million. There was no update on the status of talks in Tuesday’s statement.
Tata Steel’s crude-steel production rose 15% to 8.5 million tons in the April to December period mainly because of a ramp up in production at its Kalinganagar plant, it said last month. The shares of company, which reported earnings after the close of trade, dropped 0.1% to Rs472.80 in Mumbai on Tuesday.
Indian mills are increasing capacities betting on Prime Minister Narendra Modi’s plans to invest in infrastructure. Last week, the government announced plans to spend a record Rs3.96 trillion in the financial year starting April to build railways, airports and roads.