MUMBAI: Tata Steel BSE -1.03 % harnessed the steepest global prices in more than five years to post profits in the three months to September, but India’s oldest maker of the alloy fell short of Street estimates in a quarter that saw a settlement of the pension liabilities in its British businesses.

TATA STEEL

The steelmaker reported a net profit of Rs 1,018 crore, compared with a loss of Rs 49 crore in the same period last year. Market estimates hovered around Rs 1,600 crore. Consolidated EBITDA stood at Rs 4,726 crore against market estimates of Rs 5,200 crore.

Revenues, in line with consensus, stood atRs 32, 464 crore, up 20% over last year.

The settlement of ¤550 million toward the British Steel Pension Scheme was accounted through “other comprehensive income” in the balance sheet. However, this category does not affect EBITDA and PAT, but adds to the debt of the company.

Gross debt rose Rs 2,447 crore owing to an increase in working capital lines and forex impact, taking the total at the end of the quarter to Rs 90,259 crore.

Tata Steel, which has reportedly shown an interest in the distressed assets of Essar Steel and Electrosteels Steel, is banking on the Thyssenkrupp arrangement in Europe to delever its balance sheet.

“Once the JV is implemented, there will be an impact on the group debt due to deconsolidation in the balance sheet,” group executive director Koushik Chatterjee said.

The company had announced its long-pending merger with German conglomerate Thyssenkrupp in September to tide over losses in its European unit. Out of its capex guidance of Rs 7,000 crore for the fiscal, the company spent Rs 1,834 crore in the September quarter and is currently sitting on Rs 19,800 crore in cash and cash equivalents.

“The liquidity position of the group remains robust,” the company said in a statement.

“Tata Steel witnessed strong volume growth during the quarter as the smooth ramp up of Kalinganagar Steel plant, coupled with our strong marketing franchise, enabled us to….increase our market share,” said managing director TV Narendran. “We remain positive on the outlook of India as encouraging government reforms are expected to facilitate domestic investment and growth in the coming years.”

Souce from:By Vatsala Gaur ET Bureau|Oct 30, 2017, 11.35 PM IST