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Tata Steel has returned to the black after a string of quarterly losses, helped by a ramp up of operations at a major new plant in eastern India and by a weaker pound’s impact on its UK operation.
The Mumbai-based group announced after Tuesday’s market close that it had recorded a comprehensive profit of Rs5.2bn ($77m) in the final three months of 2016.
Despite the return to profit in the latest quarter, India’s largest steelmaker remains on course to report a loss for the financial year ending on March 31, having racked up a cumulative loss of Rs49.7bn in the first nine months of that period.
It has been hurt by the market impact of Chinese steelmakers selling large quantities of metal for which their domestic market no longer musters sufficient demand, and was forced to take a heavy writedown last year on the sale of its UK long products business.
The remainder of Tata’s UK business, which was heavily lossmaking at the start of last year, was helped in recent months by the weakness of the pound following the country’s vote to leave the EU, the company said.
It had announced an intention last March to quit the UK, but may now reverse course following the removal of its former chairman Cyrus Mistry, subject to union concessions on the unit’s pension scheme.
The company also noted a substantial increase in output from its Kalinganagar plant in the Indian state of Odisha, which it said would help it meet demand related to the government’s planned “thrust on infrastructure” over the next year.
Tata Steel’s turnover was Rs293.9bn in the quarter, up 14 per cent from a year before. Its earnings before interest, tax, depreciation and amortisation more than quadrupled to reach Rs35.5bn.