Tata Steel plunges into red with Rs 5,674-crore Q4 loss

The domestic steel giant, counted among the top 10 steel companies globally, had posted a net profit of Rs 1,035.87 crore in the year-ago period, it said in a BSE filing.

Total consolidated income declined by 21 per cent to Rs 33,666.18 crore in the last quarter of 2014-15, compared to Rs 42,428.05 crore in the same quarter of 2013-14. For the 2014-15 fiscal, the firm posted a consolidated net loss of Rs 3,925.52 crore. It had reported a net profit of Rs 3,594.89 crore in 2013-14. Consolidated total income declined to Rs 1,39,503.73 crore in 2014-15, from Rs 1,48,613.55 crore during 2013-14. 

“It has been a very challenging year for the steel industry with several macro headwinds at play,” Tata Steel Managing Director (India and South East Asia) T V Narendran said. Steel realisations fell sharply during the second half of the year due to the deluge of imports combined with sluggish domestic demand. In addition, the company’s performance was impacted by mining disruptions during the year, he added. “We are hopeful that steel demand will rebound this fiscal year on the back of higher investments across key industrial and infrastructure sectors as the government’s ‘Make-In-India’ campaign starts yielding results,” he said. 

Despite this, Tata Steel continued to outperform the industry and registered growth in deliveries in a relatively flat steel market, Narendran said. “Our focus on our marketing franchise, strong customer relationships and various cost saving initiatives have helped us weather the weak business environment,” he added. Tata Steels’ deliveries of the metal were lower at 7.06 million tonne (MT) in January-March of 2014-15 against 7.62 MT in the year-ago period. For the entire 2014-15, its steel deliveries fell to 26.32 MT from 26.56 MT. 

Tata Steel Group Executive Director (Finance & Corporate) Koushik Chatterjee said: “The company also continues to pursue its strategy of exiting non-core assets and has initiated action on de-risking its exposure to the UK Pension scheme that would help the long term sustenance of the UK business amidst difficult business environment.” Tata Steel’s India performance this year was impacted by surging imports, declining commodity prices, muted demand and regulatory uncertainties in <g data-gr-id="38">captive</g> mining operation, he said.

Tata Steel Europe MD and CEO Karl-Ulrich Kohler said: “Our European production and deliveries were stable, despite being constrained by reduced demand in the second half and operational issues such as a power blackout in the Netherlands in the fourth quarter.” Shares of Tata <g data-gr-id="43">Steel</g> today fell by 1.85 per cent to settle at Rs 361.35 apiece at the BSE.On the impairment charge, Tata Steel said: “The company recognised a non-cash write-down of goodwill and assets in the consolidated financial results in Q4 FY 2014-15 of Rs 4,951 crore, mainly relating to the Long Products UK business in Tata Steel Europe which is now fully impaired.” The impairment included a write-down of investments in overseas raw materials projects in Mozambique and Ivory Coast and the Taconite project in Canada because the economic viability of these projects remains uncertain at the current level of commodity prices, it added. “Additionally, the firm undertook a non-cash impairment charge of Rs 1,577 crore in the first quarter of FY’15 related to its investment in Mozambique Coal Project. <g data-gr-id="40">Total</g> impairment charge for FY’15 is Rs 6,391 crore in consolidated financial results,” it said. 

The company’s liquidity position and financial covenants are unaffected by the above non-cash write-down, it added. On its Indian operations, it said the industry witnessed subdued demand across steel-consuming industries. “There was a surge in low-priced imports especially from China, Japan and Korea, which led to a sharp correction in steel prices especially during the last few months of the year,” it added.