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Tata Steel swings to Rs 6,528 crore loss in Q4
The company said it has not put any of its assets on sale and the impairment was taken after taking a long term view.
Mumbai: Tata Steel on Thursday posted consolidated net loss of Rs 6,528.51 crore for the quarter ended March 31, following a non-cash write down of Rs 8,355.91 crore related to European operations and fall in demand in the euro-zone. A significant portion of Rs 8,355.91 crore impairment charge relates to the goodwill created on the acquisition of Corus Group plc in 2007, the company said. It had reported a consolidated net profit of Rs 433.46 crore in Q4 of 2011-12. The company said it has not put any of its assets on sale and the impairment was taken after taking a long term view.
"We have not put out any assets on sale...It is not a one year process. It is a journey to regain competitiveness of some of the businesses we have in our portfolio for which we are investing significant amounts...," Tata Steel's group CFO Koushik Chatterjee told reporters in Mumbai. He said the decision to take a write down was correct at this point of time and "it is also backed by plans of restructuring...We are fundamentally looking at improving competitiveness of Tata Steel Europe". Chatterjee also said that his firm is not looking at making any more provisioning at present unless some major event happens.
The company had announced few days back that it will be taking $1.6 billion non-cash write down in its financial numbers for the last quarter. According to Tata Steel, the euro-zone crisis has pushed the European economy into a recession and current steel demand is almost 30 per cent lower than the pre-2008 financial crisis level.
"These severely depressed conditions are expected to continue over the short-to-medium term and have led to a downward revision of cash flow expectations and the valuation of the Groups' European operations," it further said. Tata Steel Europe MD and CEO Karl-Ulrich Kohler said the company is consistently working on improving its costs and differentiating products despite the slump in demand, though outlook for the current fiscal is "not very well".
The company's consolidated net sales rose less than one per cent during the quarter at Rs 34,180.05 crore vis-a-vis Rs 33,860.08 crore of January-March period of FY'12 due to subdued steel demand, particularly in Europe. Tata Steel's net profit from Indian operations also declined by over 16 per cent to Rs 1,309.21 crore during the quarter, while its net sales in India rose over 13 per cent at Rs 10,602.88 crore.
Noting that Indian operations posted a strong growth in production and deliveries, Tata Steel's Managing Director HM Nerurkar said the company will commission its under- construction plant in Odisha on schedule. Chatterjee said Tata Steel has closed project financing for the Odisha project and it recently got funding commitment from a consortium of 21 banks for around Rs 22,000 crore. He added that the recently completed bond issue of SGD 300 million has met company's requirements.
For the financial year ended March 31, 2013, Tata Steel reported a consolidated net loss of Rs 7,057.62 crore as against a net profit of Rs 5,389.77 crore, largely due to the impairment. Net profit of Tata Steel's Indian operations also declined by over 24 per cent to Rs 5,062.97 crore in the last fiscal vis-a-vis Rs 6,696.42 crore of FY'12.
According to the company, its total annual steel deliveries in the last fiscal were 24.13 MT, a little less than 24.22 MT of 2011-12. Deliveries during the last quarter rose 5.6 per cent at 6.56 MT. The company also said that despite weak market demand, its Indian operations recorded robust performance due to ramp up of its 2.9 million tonnes per annum expansion. Its fourth quarter deliveries rose by 28.9 per cent at 2.28 MT, while the annual deliveries were up 12.8 per cent to 7.48 MT in FY'13.
The company also announced that it will not be proceeding with its greenfield steel project in Vietnam in the near future, although it did not spell out the reasons. During the last fiscal, the company raised Rs 31,799 crore debt from various banks and financial markets taking its gross debt to Rs 66,074 crore. Net debt at the end of March, 2013, was Rs 55,421 crore. Tata Steel scrip fell 2.03 per cent to close at Rs 299.50 on the BSE.