July 26, 2017

Tata Metaliks reported financial results for quarter ended June 30, 2017

Kolkata: On July 25, 2017, Tata Metaliks (TML) declared its financial results for the first quarter of FY2018 (Q1 FY’18). The company recorded deliveries of 52,731 tonnes of pig iron and 49,036 tonnes of DI pipe for the quarter. Turnover for the quarter was Rs408 crore.

Performance highlights:

(Figures in Rs crore unless specified)
Q1 FY’17   Q1 FY’18 Q4 FY’17
59,314 Pig iron sales (tonnes) 52,731 30,811
39,639 DI pipe sales (tonnes) 49,036 65,640
334 Turnover 408 415
61.10 EBITDA 60.08 75.58
7.68 Depreciation 11.61 12.35
8.27 Finance costs 9.33 11.50
- Exceptional items - -
45.15 PBT 39.14 51.74
34.44 PAT 30.62 40.36
13.61 Earnings per Share (Rs) 12.11 15.96

 

  • Drop in sales of DI pipe in the current quarter was caused due to seasonal factors (less work at site during the summer and monsoon months) and also lower exports.
  • Pig iron sale in Q1 FY’18 was higher than Q4 FY’17, because one of the blast furnaces was shut down for two months for capital repair in the previous quarter. Pig iron sales, however, were affected due to poor demand and uncertainties prevailing in pre-GST implementation period.
  • Although pig iron and DI pipe price realisation in Q1 FY’18 improved 3 percent and 2 percent, respectively, compared to Q4 FY’17, PBT in Q1 FY’18 was lower than Q4 FY’17 due to lower sales volume of DI pipes and increase in coal and coke prices.
  • Q2 FY’18 has started with further increase in coal and coke prices, and if this upward trend continues, there will be pressure on domestic pig iron manufacturers to pass on the cost push to the consumers, which might be challenging for TML. However, efficiency in plant operation and cost benefits from 10MW of captive power plant is expected to mitigate the impact of higher raw material costs. In the DI pipe business, post implementation of GST on July 1, 2017, lack of clarity on absorption of GST by the infrastructure projects has led to despatches being deferred. DI pipe, which in most of the cases, was exempt from excise duty, is now subject to 18 percent GST. This may affect sales volume in Q2 FY’18 till clarity is obtained, although TML has firm order commitments of ~ 160KT. Any shortfall in sales in Q2 FY’18 is therefore expected to be made up in Q3 and Q4.

Mr Sandeep Kumar, managing director, Tata Metaliks, said, “The company’s DI pipe division’s operational and market performance is expected to raise company’s performance year on year, despite some operational issues in closing the deliveries in Q1 FY’18 due to GST-related issues. The company’s order book in DI pipes is comfortable and is expected to improve further in view of robust market demand in water and irrigation sectors. However, volatility in coal and coke prices and rather muted demand of pig iron are areas of concern for the company. Various growth and efficiency-related capital projects commissioned in FY’17 would provide necessary support in the current financial year in making the company competitive at the marketplace and delivering the desired financial targets”.