There was a marked improvement in profitability as the Group net profits for the fourth quarter ended March 31, 2014 rose to Rs.1,036 crores from Rs.503 crores in the previous quarter. Similarly, for the full year ending March 31, 2014, the underlying net profit came in at Rs.3,623 crores compared to the underlying profit of Rs.332 crores for the year ended March 31, 2013. The improvement in the underlying profitability over the last year was Rs.3,290 crores. The improved and steady performance of operations across geographies, despite weak market conditions, led to this significantly improved Group performance.

Group Performance Highlights:

• Group steel deliveries in FY 2013-14 (FY’14) increased to 26.56 million tonnes from 24.13 million tonnes in FY 2012-13 (FY’13). Deliveries in Q4 FY 2013-14 (Q4 FY’14) increased to 7.62 million tonnes compared to 6.38 million tonnes in Q3 FY 2013-14 (Q3 FY’14) and 6.56 million tonnes in Q4 FY 2012-13 (Q4 FY’13).
   
• Group consolidated turnover in FY’14 was Rs. 1,48,614 crores versus Rs.1,34,712 crores in FY’13. Q4 FY’14 turnover increased to Rs.42,428 crores from Rs.36,736 crores in Q3 FY’14 and Rs.34,650 crores in Q4 FY’13. 

• FY’14 Group EBITDA was Rs.16,377 crores compared to Rs.12,654 crores in FY’13, implying an improvement of 29%. Q4 FY’14 EBITDA increased significantly to Rs.4,917 crores from Rs.3,921 crores in Q3 FY’14 and Rs.4,368 crores in Q4 FY’13.

• Group Profit after Tax (after minority interest and share of profit of associates) in FY’14 swung to Rs.3,595 crores versus the loss of Rs.7,058 crores in FY’13. FY’14 results included exceptional charges of Rs.28 crores compared to the charges of Rs.7,390 crores in FY’13. Profit after tax in Q4 FY’14 doubled to Rs.1,036 crores compared to Rs.503 crores in Q3 FY’14 and was a significant improvement over the loss of Rs.6,529 crores in Q4 FY’13. Q4 FY’14 results were affected by exceptional charges of Rs.46 crores while the exceptional charges for Q4 FY’13 were Rs.7,413 crores.

• The Group’s Basic and Diluted Earnings per share (EPS) for FY’14 increased to Rs.35.19 from the loss of Rs.74.54 in FY’13. EPS in Q4 FY’14 came in at Rs.10.20 compared to Rs.4.73 in Q3 FY’14 and the loss of Rs.67.69 in Q4 FY’13.

• Cash and cash equivalents as on March 31, 2014 were Rs.11,373 crores and net debt was Rs.67,326 crores.

• The Board of Directors of the Company has recommended a dividend of Rs.10 per equity share for the financial year ended March 31, 2014.

India

Performance of the Indian operations improved significantly despite the weak macroeconomic environment. There were significant achievements in terms of operations and financial performance.

• Several of our steelmaking facilities achieved their highest ever production in the last year. The rolling facilities of the brownfield expansion at Jamshedpur reached their full capacity in the second half of last year and total steel production was the highest ever. To cater to the increased requirements, the iron ore mines ramped up and produced record quantities. Steel demand in India remained almost flat in the last year, while our customer focus, better products and vast distribution network helped us to sell 1 million tonnes more over the previous year. Deliveries increased by 14% to 8.52 million tonnes in FY’14 from 7.48 million tonnes in FY’13. Q4 FY’14 deliveries increased to 2.41 million tonnes versus 2.07 million tonnes in Q3 FY’14 and 2.28 million tonnes in Q4 FY’13.

• Sales of Automotive and Special Products increased by 15% in FY’14 despite a ~5% decline in the auto market. Sale of Branded Products, Retail and Solutions constituted 34% of the total sales and increased by 11% over the previous year. Sale to Industrial Products, Projects and Exports increased by 18% over FY’13. Proactive market development has helped in expanding the domestic customer base with exports constituting only 2% of total sales in FY’14.

• Turnover in FY’14 was Rs.41,711 crores compared to Rs.38,199 crores in FY’13. Q4 FY’14 turnover increased by 20% to Rs.12,191 crores from Rs.10,143 crores in the previous quarter and Rs.10,771 crores in Q4 FY’13. The sequential improvement in revenue was driven by higher volumes and better realisations.

• FY’14 EBITDA was Rs.13,281 crores, up by 14% from Rs.11,698 crores in FY’13. Q4 FY’14 EBITDA was Rs.4,052 crores, 29% higher compared to Rs.3,131 crores in Q3 FY’14, and 9% higher than Rs.3,714 crores in Q4 FY’13. The EBITDA margin increased by 237 basis points in Q4 FY’14 compared to the previous quarter.

• Profit after tax in FY’14 was Rs.6,412 crores, a 27% increase from Rs.5,063 crores in FY’13. Q4 FY’14 profit was Rs.1,979 crores, 30% higher than Rs.1,519 crores in Q3 FY’14 and 51% higher than Rs.1,309 crores in Q4 FY’13.

• Basic Earnings Per Share (EPS) in FY’14 increased to Rs.64.21 from Rs.50.28 in FY’13. EPS in Q4 FY’14 was Rs.19.93 compared to Rs.15.18 in Q3 FY’14 and Rs.13.02 in Q4 FY’13.

Europe

The revamped Blast Furnace in UK together with improved reliability in Europe as a whole led to an increase in volumes compared to the previous year. Financial performance consequently improved, despite average market conditions being worse than in the previous year. Sales volumes also grew, as did the quality profile. The volume of new products sold rose by more than 75% in FY’14 compared to the previous year and the company launched 30 new products, as promised.

Progress on improving the product and service portfolio, including success in Early Vendor Involvement initiatives led to the company improving its standing with its customer base which was expressed through numerous customer recognition awards, such as Toyota awarding Tata Steel its Certificate of Recognition for the company's contribution in the area of quality.

• Liquid steel production in FY’14 increased 16% to 15.46 million tonnes from 13.37 million tonnes in FY’13. Q4 FY’14 production of 4.04 million tonnes was 3% higher than the 3.91 million tonnes produced in Q3 FY’14 and 26% higher than the 3.22 million tonnes produced in Q4 FY’13.

• Deliveries increased to 13.86 million tonnes in FY’14, up 6% from the 13.07 million tonnes in FY’13. Q4 FY’14 deliveries of 4.07 million tonnes were 27% higher than the 3.19 million tonnes in Q3 FY’14 and 19% higher than the 3.42 million tonnes in Q4 FY’13.

• Turnover in FY’14 was Rs. 84,666 crores versus Rs.78,012 crores in the previous year. Q4 FY’14 turnover was Rs.24,376 crores compared to Rs.20,709 crores in Q3 FY’14 and Rs.19,166 crores in Q4 FY’13.
   
• FY’14 EBITDA almost quadrupled to Rs.3,008 crores from Rs.764 crores in FY’13. Q4 FY’14 EBITDA of Rs.817 crores was down from Rs.860 crores in Q3 FY’14, but up from Rs.613 crores in Q4 FY’13.

• FY’14 EBIT was a loss of Rs.158 crores, an improvement on the Rs.2,425 crores loss in the previous year. Q4 FY’14 EBIT was a loss of Rs.16 crores compared to the loss of Rs.2 crores in Q3 FY’14 but an improvement on the loss of Rs.213 crores in Q4 FY’13.

South East Asia

The South East Asian operations reported steady performance on the back of operational improvements, cost reduction and restructuring despite severe import pressures in the region and continued political uncertainty in Thailand.

• FY’14 deliveries totalled 3.98 million tonnes, a 28% increase over the 3.11 million tonnes in FY’13. Q4 FY’14 deliveries were 1.07 million tonnes, slightly lower than 1.09 million tonnes in Q3 FY’14 but 34% higher than 0.8 million tonnes in Q4 FY’13.

• Turnover in FY’14 increased by 23% to Rs.16,988 crores compared to Rs.13,829 crores in FY’13. Q4 FY’14 turnover was Rs.4,365 crores versus Rs.4,537 crores in Q3 FY’14 and Rs.3,486 crores in Q4 FY’13.
   
• EBITDA declined by 9% to Rs. 439 crores in FY’14 from Rs.483 crores in FY’13 due to a severe cost-price squeeze. Q4 FY’14 EBITDA was Rs.80 crores, lower than Rs.137 crores in Q3 FY’14 and Rs.224 crores in Q4 FY’13.

Financial Performance Analysis:

Consolidated financial results summary (under Indian GAAP) for the financial year and fourth quarter ended 31 March 2014

All figures in Rs.Crore, unless specified

FY'14	FY'13	HIGHLIGHTS	Q4 FY'14	Q3 FY'14	Q4 FY'13
26.56	24.13	Steel Deliveries (million tons)	7.62	6.38	6.56
148,614	134,712	Turnover	42,428	36,736	34,650
16,377	12,654	EBITDA	4,917	3,921	4,368
5,841	5,575	Depreciation	1,472	1,522	1,470
3,855	3,517	Net Finance Charges	999	1,001	913
6,722	- 4,133	PBT	2,436	1,395	-5,576
3,595	-7,058	Profit after Taxes, Minority Interest and Share of Associates	1,036	503	-6,529
35.19	-74.54	Basic and Diluted Earnings per Share (Rs.)	10.20	4.73	-67.69

Executive Comment

Mr T V Narendran, Managing Director of Tata Steel India and South East Asia, said: “It’s been a high performance year at Tata Steel and a more gratifying one as we performed well against challenging market conditions both in India and South East Asia. We have performed better than industry growth figures across product / market segments with substantive increase in sales volumes. Sale of high-end products to automotive segment has been the highest ever despite a de-growth in the auto market in India. Our efforts to develop new markets in the SME segment with an innovative business model has enabled significant increase in sales of branded HR coils. We continue to spread our presence by strengthening our reach & customer connect through the retail route. Our focus remains on increasing value added downstream operations and delivering quality and innovative products/services across all verticals of our business. Our brown-field expansion of 2.9 mtpa in Jamshedpur fully ramped up in the second half, resulting in record high production of crude and saleable steel notwithstanding our scheduled maintenance shutdowns in Q3.

The performance of our South East Asian operations continue to remain strong and have delivered positively to the overall bottom line of the company. We look forward to continuing on this growth trajectory and are focused on efficient execution of our expansion projects.”

Dr Karl-Ulrich Köhler, MD & CEO of Tata Steel in Europe, said: “The key to last year was our relentless focus on operational reliability, which restored our asset base and enabled our production to return to more usual levels. Our financial performance improved as a result. At the same time we advanced our high-quality portfolio programme, launching 30 new products as promised and increasing sales of new products by more than 75%. By intensifying our innovation efforts, our sales to automotive manufacturers grew against trend - a third of these sales were differentiated products which helped customers deliver cost, weight and performance improvements.

Europe appears to be entering a phase of solid economic growth, which is supporting a recovery in steel demand. But EU steel use will remain at low levels historically against a background of continuing global overcapacity. Faced with these challenges we will intensify our efforts to achieve sustainable financial performance by continuing to improve the support and services we offer our customers and maintaining our focus on costs and operational efficiency.”

Mr Koushik Chatterjee, Group Executive Director (Finance and Corporate), said: “Group profitability showed sustainable improvement over the year on the back of strong performance in key regions. Despite weak market conditions in India, our business achieved higher sales and generated a higher EBITDA margin of 32% for the year. Our European operations also showed a strong recovery over FY’13, with higher volumes and an improvement in EBITDA margins by 257bps over the year. We spent around Rs.16,400 crores on capex during the year, with a large portion deployed at our greenfield plant in Odisha. Despite this significant spend, we were able to keep the net debt level stable over the last quarter. Liquidity remains adequate with around Rs.18,000 crores of cash and cash equivalents and undrawn credit lines, in addition to the undrawn KPO financing.”

Disclaimer

Statements in this press release describing the Groups’ performance may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Group’s operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Group operates, changes in Government regulations, tax laws and other statutes and incidental factors.

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Samita Shah
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