Tata Steel group declared its consolidated financial results for the nine months and third quarter ended 31 December 2013. The positive earnings momentum continued even in a seasonally weak period as the group net profits for the third quarter came in at Rs503 crore (~US$80.4 million) compared to the net loss of Rs763 crore in the previous year, while the net profit for the first nine months of this year was Rs2,559 crore compared to the loss of Rs529 crore in the first nine months of the previous year. The improved and steady performance of operations across geographies led to this significantly improved group performance.
 
Group performance highlights

• Group steel deliveries in 9M FY 2013–14 (9M FY’14) increased to 18.94 million metric tons from 17.57 million metric tons in 9M FY 2013–14 (9M FY’13). Deliveries in Q3 FY 2013–14 (Q3 FY’14) were 6.38 million metric tons compared to 6.48 million metric tons in Q2 FY 2013–14 (Q2 FY’14) and 5.83 million metric tons in Q3 FY 2013–14 (Q3 FY’13).
• Group consolidated turnover in 9M FY’14 was Rs1,06,186 crore versus Rs1,00,061 crore in 9M FY’13. Q3 FY’14 turnover increased to Rs36,736 crore from Rs36,645 crore in Q2 FY’14 and Rs32,107 crore in Q3 FY’13.
• 9M FY’14 group EBITDA was Rs11,460 crore compared to Rs8,286 crore in 9M FY’13, implying an improvement of 38%. Q3 FY’14 EBITDA increased to Rs3,921 crore from Rs3,784 crore in Q2 FY’14 and rose significantly from Rs2,252 crore in Q3 FY’13.
• Group profit after tax (after minority interest and share of profit of associates) in 9M FY’14 was Rs2,559 crore versus the loss of Rs529 crore in 9M FY’13. Profit after tax in Q3 FY’14 was Rs503 crore compared to Rs917 crore in Q2 FY’14 and the loss of Rs763 crore in Q3 FY’13.
• The group’s basic and diluted earnings per share (EPS) for 9M FY’14 increased to Rs24.99 from the loss of Rs6.84 in 9M FY’13. EPS in Q3 FY’14 came in at Rs4.73 compared to Rs8.98 in Q2 FY’14 and the loss of Rs8.32 in Q3 FY’13.
• Cash and cash equivalents as on 31 December 2013 were Rs6,371 crore and net debt was Rs70,129 crore.

India 
The Indian operations maintained steady performance despite a weak macroeconomic environment and maintenance shutdowns at Jamshedpur.

• The rolling facilities of the brownfield expansion at Jamshedpur reached their full capacity in the last quarter and as a result the flat products production was the highest ever. The pellet plant also reached its rated capacity in the last quarter.
• Tata Steel has been conferred the CII ITC sustainability prize for the sixth time which acknowledges Tata Steel's efforts in the area of sustainability.
• Deliveries increased by 17% to 6.11 million metric tons in 9M FY’14 from 5.2 million metric tons in 9M FY’13 with the ramp-up of the expansion in Jamshedpur. Q3 FY’14 deliveries increased to 2.07 million metric tons versus 2.04 million metric tons in Q2 FY’14 and 1.89 million metric tons in Q3 FY’13.
• Sales of flat products were 3% higher than the previous quarter and 36% higher compared to 9M FY’13 with strong sales across product and customer categories. Sale of long products declined over the comparable periods due to a major maintenance shutdown. However, sale of value-added products increased over the comparable periods despite the slowdown across end-user sectors.
• Turnover in 9M FY’14 was Rs29,520 crore compared to Rs27,429 crore in 9M FY’13. Q3 FY’14 turnover increased to Rs10,143 crore from Rs9,921 crore in the previous quarter and Rs9,370 crore in Q3 FY’13. The 2% sequential improvement in the revenues was mainly driven by higher realization.
• 9M FY’14 EBITDA was Rs9,229 crore, up by 16% from Rs7,984 crore in 9M FY’13. Q3 FY’14 EBITDA was Rs3,131 crore compared to Rs3,202 crore in Q2 FY’14 and Rs2,525 crore in Q3 FY’13. The EBITDA margin was flat at 31% in Q3 FY’14 compared to 32% in the last quarter while improving significantly from 27% in Q3 FY’13.
• Profit after tax in 9M FY’14 was Rs4,434 crore, an 18% increase from Rs3,754 crore in 9M FY’13. Q2 FY’14 profit was Rs1,519 crore; marginally lower than Rs1,559 crore in Q2 FY’14 but 45% higher than Rs1,046 crore in Q3 FY’13.
• Basic EPS in 9M FY’14 increased to Rs44.29 from Rs37.26 in 9M FY’13. EPS in Q3 FY’14 was Rs15.18 compared to Rs15.59 in Q2 FY’14 and Rs10.31 in Q3 FY’13.

Europe
Operational improvements continued in Europe as the upgraded asset base produced the largest volume of liquid steel on a like-for-like basis in more than five years.

• Liquid steel production in Q3 FY’14 increased to 3.91 million metric tons from 3.86 million metric tons in the previous quarter. Q3 FY’14 production was 19% higher than the 3.29 million metric tons produced in Q3 FY’13.
• Deliveries increased to 9.79 million metric tons in 9M FY’14, compared to 9.65 million metric tons in 9M FY’13. Q3 FY’14 deliveries were lower at 3.19 million metric tons compared to 3.46 million metric tons in Q2 FY’14 due to seasonal weakness but increased by 6% from 3.02 million metric tons in Q3 FY’13.
• Sale volumes of differentiated products rose by 14% in 9M FY’14 compared to the previous year, highlighting the success of the company’s strategy in a fiercely competitive market.
• Turnover in 9M FY’14 was Rs60,290 crore versus Rs58,846 crore in the previous year. Q3 FY’14 turnover was Rs20,709 crore compared to Rs21,149 crore in Q2 FY’14 and Rs18,126 crore in Q3 FY’13.
• 9M FY’14 EBITDA was Rs2,191 crore, a significant improvement from Rs152 crore in 9M FY’13. Q3 FY’14 EBITDA was Rs860 crore compared to Rs554 crore in the previous quarter and the EBITDA loss of Rs428 crore in Q3 FY’13.
• The quarter also marked some important customer wins and product innovations. The company secured significant orders for the supply of high-quality rail to the national rail operators in France and the UK. The French contract for 200,000 metric tons of rail justifies the investment in the company’s capability to make longer and wear-resistant rail.
• In 9M FY’14, the company launched 21 new products in the market, more than it launched in the whole of FY’13 and the most since it started the new product programme in FY’11.
• The company enhanced their largest service center in the UK and have realigned the sales activities of their distribution and service centers in mainland Europe to better serve their customers.

South East Asia 
The South East Asian operations were partly affected by the political instability at Thailand. However, the operations stabilized in Singapore while the facilities in China were ramped up.

• 9M FY’14 deliveries totaled 2.91 million metric tons, a 26% increase over the 2.31 million metric tons in 9M FY’13. Q3 FY’14 deliveries were 1.09 million metric tons, up from 0.96 million metric tons in Q2 FY’14 and 0.82 million metric tons in Q3 FY’13.
• Turnover in 9M FY’14 increased by 22% to Rs12,623 crore compared to Rs10,343 crore in 9M FY’13. Q3 FY’14 turnover was Rs4,537 crore versus Rs4,179 crore in Q2 FY’14 and Rs3,465 crore in Q3 FY’13.
• EBITDA increased by 39% to Rs359 crore in 9M FY’14 from Rs259 crore in 9M FY’13. Q3 FY’14 EBITDA was Rs137 crore, up from Rs129 crore in Q2 FY’14 and in line with Rs144 crore in Q3 FY’13.

Financial performance analysis 
Consolidated financial results summary (under Indian GAAP) for the nine months and third quarter ended 31 December 2013.

9M FY'14	9M FY'13	Highlights	Q3 FY'14	Q2 FY'14	Q3 FY'13
18.94	17.57	Steel Deliveries (million tons)	6.38	6.48	5.83
1,06,186	1,00,061	Turnover	36,736	36,645	32,107
11,460	8,286	EBITDA	3,921	3,784	2,252
4,369	4,106	Depreciation	1,522	1,444	1,463
2,856	2,604	Net Finance Charges	1,001	976	964
4,286	1,443	PBT	1,395	1,398	-220
2,559	-529	Profit after Taxes, Minority Interest and Share of Associates	503	917	-763
24.99	-6.84	Basic and Diluted Earnings per Share (Rs)	4.73	8.98	-8.32

Executive comment 
TV Narendran, managing director of Tata Steel India and South East Asia, said: “Indian steel markets continued to remain weak during the quarter with the economy and most of the steel-consuming sectors facing severe headwinds. Against this macro backdrop, Tata Steel continued to post steady growth in sales volume for the quarter and the year-to-date. In fact, sales would have been higher if not for production constraints due to planned shutdowns for maintenance. We continue to work closely with our OE customers while enhancing our product portfolio and spreading our reach across India for the sale of branded products in retail. We are hopeful that the sentiment improves in the seasonally strong fourth quarter and with the shutdowns now behind us, Tata Steel should achieve robust operational improvement. The underlying performance of the South East Asian operations remains strong though there has been some impact of the political instability in Thailand.”
 
Dr. Karl-Ulrich Köhler, MD and CEO of Tata Steel in Europe, said: “The asset base we restored and upgraded last year has been running at stable rates, which has led to the continued year-on-year turnaround in financial performance. The work to enhance our product and service profile and our focus on cost and cash flow continued, supporting the year-on-year improvement in EBITDA, despite lower margins. With European economic indicators improving, these efforts will better enable us to benefit from any growth in European steel demand, which remains at historically low levels.”
 
Koushik Chatterjee, group executive director, finance and corporate, said: “The market conditions continue to be challenging in all geographies with contracted spreads between steel realizations and raw material prices. Under these conditions, Tata Steel group was able to report consistent earnings performance in the nine months, on the back of higher volumes primarily in India, differentiated and downstream product strategy across all geographies and better margin management. We have been able to stabilize the gross debt levels excluding the translation impact even as we continue to execute the planned capex, especially on the greenfield project in Odisha which remains a key priority for the company. We have spent around Rs3,900 crore during the quarter and about Rs12,300 crore in the nine months on essential and critical projects. Liquidity management remains a key focus area with Rs6,400 crore of cash and cash equivalents. In addition, we have undrawn term facilities for the Odisha project.”