Posted on 06 Nov 2015
Consolidated net income rose to 15.29 billion rupees ($233 million) for the quarter ended Sept. 30, from 12.54 billion rupees a year earlier, Tata Steel said in a statement on Thursday. Analysts on an average had expected a profit of around 12 billion rupees. Sales declined 18.1% to 290.69 billion rupees.
The company's European unit posted a loss of 2.38 billion rupees, as steel deliveries declined to 3.27 million tons. Tata Steel and rivals are grappling with rising imports of Chinese steel as producers in Asia's largest economy have boosted overseas sales amid a slowdown in consumption at home.
"Operational restructuring in the U.K., increasing steel imports and the relative strengthening of the pound against the euro affected our competitiveness,'' Koushik Chatterji, Tata Steel's group executive director, told reporters in Mumbai after releasing the earnings.
India, the world's third-biggest steel producer, has raised the import duty on steel products in recent months, but the move hasn't slowed imports. The country imported 9.32 million tons last fiscal year, around 70% more than a year earlier, with cheaper purchases from China accounting for about a third of the total.
Tata Steel's other income for the quarter jumped nearly nine-fold to 29.38 billion rupees, as the company booked a gain of 28.08 billion rupees, mostly related to the sale of shares in group company Tata Motors.
The steel maker sold shares worth up to 25 billion rupees in Tata Motors in September. Tata Steel held nearly 152 million shares, or 4.71%, of Tata Motors stock at the end of March. Tata Motors had 44.32 million shares, or 0.46%, of Tata Steel.
Under previous chairman Ratan Tata, India's $109 billion Tata Group embarked on a global expansion spree through a series of high-profile acquisitions that included a $2.5 billion purchase of luxury automaker Jaguar Land Rover in 2008 and the near-$13 billion deal for Anglo-Dutch steelmaker Corus.
Tata Steel has been looking to pare its more than $12 billion debt, accumulated after its 2008 purchase of Corus. It has shed more than 700 jobs in the U.K. in the last few months and is pushing a voluntary staff benefit program for its local employees. Tata Steel also recently announced closure of some of its manufacturing sites in the U.K.
"We will continue our focus on value and match our production to market conditions through the rest of this year,'' Karl Ulrich Koehler, head of Europe business, said.
