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Tata Steel Q4 FY16 loss narrows to Rs 3,214 crore

While earnings were impacted by an exceptional charge to the P&L account, lower-than-expected loss from European operations and better realisations in India helped the company

Published: May 25, 2016 05:06:10 PM IST
Updated: May 26, 2016 03:06:31 PM IST
Tata Steel Q4 FY16 loss narrows to Rs 3,214 crore
Image: Getty Images
Koushik Chatterjee, Group Executive Director (Finance and Corporate)

Tata Steel, the steelmaking arm of the salt-to-software conglomerate Tata Group, posted a net consolidated loss of Rs 3,214 crore for the quarter ended March 31, 2016. Losses narrowed from the year-ago period when the company had posted a net loss of Rs 5,674 crore.

For the full financial year 2015-16, Tata Steel’s consolidated net loss amounted to Rs 3,049 crore, lower than the loss of Rs 3,926 crore reported for 2014-15. Consolidated turnover for the year stood at Rs 117,152 crore, down 16 percent year-on-year.

The company, whose main operations are in India and Europe, posted a 12.35 percent year-on-year decline in turnover in the January-March 2016 quarter to Rs 29,508 crore.

While the company posted a consolidated Ebitda (earnings before interest, tax, depreciation and amortisation) of Rs 2,270 crore, it reported a loss at the net level largely due to exceptional charges recognised in the profit and loss statement to the tune of Rs 2,900 crore on account of further impairment of its business in the UK, closure of its iron ore business in Canada, and a voluntary employee separation scheme in India whereby 1,500 people have been let go.

With certain sections of the Indian industry doing well, resulting in higher demand for steel and greater offtake, Tata Steel’s Indian operation did relatively well in the March quarter. While revenue from the Indian operations remained flat year-on-year at Rs 10,522 crore, Ebitda from the business increased by 31.72 percent to Rs 2,188 crore. However, owing to the exceptional charge on account of the voluntary employee separation  scheme and a higher tax incidence, Tata Steel India’s net profit fell by 16.83 percent year-on-year to Rs 677 crore.

While Tata Steel’s beleaguered operations in Europe still continues to be in the red, losses at the Ebitda level have halved to $53 million on the back of lower costs due to accrual of benefits from restructuring, a Prabhudas Lilladher (PL) research reported dated May 26 said.     

In a conference call with analysts late on Wednesday evening, Tata Steel indicated that realisations per tonne of steel in India was likely to increase by a significant Rs 3,000 in the April-May quarter, according to the PL report. The Ebitda per tonne of steel sold by Tata Steel India in the fourth quarter of the previous fiscal stood at Rs 8,050.

Koushik Chatterjee, group executive director (finance and corporate) at Tata Steel, said on Wednesday evening that the company had shortlisted the bidders with whom it wants to take forward the process of divesting its remaining business in the UK, which has been a financial drain on the company, after agreeing to sell the long products business to Greybull Capital for a nominal consideration of £1. Chatterjee neither divulged the number of bids that Tata Steel Europe had received nor by when it expected to complete the sale process.

Shares of Tata Steel were trading at Rs 321.80 apiece at 1.03 pm on the BSE on Wednesday, down 0.79 percent from its previous close. The bourse’s benchmark S&P BSE Sensex was up 0.89 percent to 26,112.62 points at the same time.

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