Tata Steel net surges 91% as tax outgo dips | business | Hindustan Times
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Tata Steel net surges 91% as tax outgo dips

business Updated: Aug 13, 2013 22:14 IST

Posting better-than-expected results, Tata Steel on Tuesday said its consolidated net profit zoomed 90.51% to Rs 1,139 crore during the April-June quarter, primarily due to deferred tax gain of Rs 415 crore.

Improved performances at the company's operations in India and Europe also contributed to the earnings spurt.

Marketmen said there was wide a divergence on Tata Steel's earnings expectation, with projections ranging from a net loss, to a maximum of 20% growth in net profit.

The company had reported net profit of Rs 597.88 crore in the April-June quarter of 2012-13 fiscal.

Its net sales during Q1, 2013-14, were down 3% to Rs 32,550.21 crore largely due to continuous slump in the global steel demand. Tata Steel had reported net sales of Rs 33,547.73 crore in the year-ago period.

The company, however, is expecting tougher times in India where demand has shrunk and market conditions have become more difficult than at the beginning of the year, Tata Steel group CFO Koushik Chatterjee said in an investor call.

He said challenges in the auto sector are continuing, while there is a seasonal weakness in the construction sector on account of monsoons.

Tata Steel is expecting better numbers in Europe as it had started regaining some of its traditional market amid first signs of economic recovery there, Tata Steel Europe MD and CEO Karl-Ulrich Kohler said.

Tata Steel Europe's production at 3.14 million tonnes (MT) during the quarter was highest ever quarterly production in last two years, he said, adding that the differentiated products strategy it adopted has started paying off.

About tax gains of Rs 415 crore, Chatterjee said that it happened due to tax returns in the Netherlands resulted in a deferment in capital allowances during the quarter. It resulted in creation of deferred tax liability.

"At a point of time, we always follow the principle of zero deferred tax liability, so we created a deferred tax asset to that extend. The one in Netherlands is more like one time (gain), so it will not happen (further)," he added.

Due to the deferred tax gains, company's overall tax outgo declined by nearly 61% to Rs 351.39 crore in the Q1 vis-a-vis Rs 898.63 crore of the first quarter of 2012-13.

Tata Steel's Indian operations reported net profit of Rs 1,356.11 crore, almost the same as was in Q1FY'13 (Rs 1,356.56 crore).

Standalone net sales were up 6.15% at Rs 9,363 crore vis-a-vis Rs 8,820.19 crore in the year-ago period, largely due to increased capacity.

The company had added 2.9 MT new capacity some time back at its Jamshedpur plant.