Tata Steel benefits from sharp improvement in its FAM division

22 May 2017

Tata Steel’s performance in its home market in FY17 received an unexpected boost from its Ferro Alloys and Minerals (FAM) division. Apart from an 18% jump in steel deliveries year on year which outperformed the domestic markets, Tata Steel benefitted from a sharp improvement in its FAM division on the back of improved market conditions.

The quarterly operating profit of the division was at Rs 573 crore which was higher by Rs 271 crore compared to the previous quarter. The full year operating profit of the FAM division stood at Rs 1,165 crore, higher by Rs 1,040 crore compared to the previous fiscal.

Full year volumes touched 10.97 million tonne at Tata Steel’s India operations. Additionally, automotive sales grew by 9% y¬o¬y consolidating the market share of over 43%, while industrial products, projects and exports saw a 47% growth y-o-y.

Tata Steel said branded products now contribute 45% of total sales and it is well-positioned to mitigate fluctuating demand.

Tata Steel’s new Greenfield unit in Odisha, the Kalinganagar Steel Plant crossed 2.2 million tonne of hot metal and 1.5 million tonne of hot rolled coil production since commissioning in May 2016. The company said EBITDA (earnings before interest, taxes, depreciation and amortization) improved to Rs 4,324 crore for the quarter ended March 31, 2017, up 28% sequentially and 93% y¬o¬y on the back of supportive realisations, strong growth in deliveries and ramp up of Kalinganagar plant. The company’s full year EBITDA was at Rs 11,953 crore.

Commenting on the performance and future outlook, TV Narendran, managing director, Tata Steel India & South East Asia said:

“Increasing emphasis on domestically manufactured steel in government projects coupled with renewed thrust on infrastructure, affordable housing and tax reforms are expected to be supportive for demand and margins. Our Kalinganagar facility, which continues to ramp up smoothly, is well positioned to serve the expected increase in demand in FY18 and beyond.”

He added that the company’s focus on cost improvement measures and integrated operations helped it to contain the impact of rising prices.

Source: Economic Times