Tata Steel Ltd on Wednesday reported a whopping Rs 6,511-crore consolidated loss in quarter ended September 30, 2023 hurt by charges related to restructuring at its UK operations and lower sales and price realisations. It reported consolidated net profit of Rs 1,297 crore in the year-ago period.
The steelmaker said its consolidated revenue declined 7% to Rs 55,682 crore in Q2FY24 as against Rs 59,878 crore in Q2FY23. On Wednesday, the firm’s scrip closed trading 2% lower at Rs 116.15.
T V Narendran, Chief Executive Officer & Managing Director, said: “Tata Steel India delivered steady performance, with crude steel production of around 5 million tons. Domestic deliveries were up 6% YoY, despite renewed volatility and seasonal factors during the quarter. Among the key segments, Auto and Branded Products & Retail had best ever 2Q sales. We have started producing FHCR coils at Kalinganagar CRM complex and have started receiving approvals from automotive OEMs for our cold rolled steel. Our retail sales to home builders continue to grow aided by our strong distribution network. In UK, we plan to invest in a state-of-the-art scrap based EAF with the government support and this will enable reduction of 50 million tons of direct carbon emissions over a decade. In India, we are committed to responsible growth and are undertaking multiple initiatives ranging from scrap charging in blast furnace to greening the power mix.”
Tata Steel, which has an annual crude steel capacity of 35 million tonnes per annum, said it took a charge of Rs 6,348 crore on a consolidated basis in relation to the restructuring in the UK business.
“We have assessed the potential impact of the EAF-based decarbonisation project and restructuring in UK. We have taken an impairment charge of Rs 12,560 crore in standalone financial statements and Rs 2,746 crore in consolidated financial statements. In addition, we have taken a charge towards restructuring & other provisions of Rs 3,612 crores in consolidated financial statements,” said Tata Steel in a stock exchange filing.
In September, the company struck a 1.25 billion pound deal with the British government to decarbonise its Port Talbot site, which would likely impact 3,000 jobs. The transition to EAF-based steelmaking will result in reduction of 50 mn tons of direct carbon emissions over a decade, said the firm.
Tata Steel said it has initiated informal discussions with trade union representatives explaining the impact of the restructuring proposal. Trade union Unite said on Wednesday it has called on the UK government to “intervene immediately” on anticipated job cuts.
Koushik Chatterjee, Executive Director and Chief Financial Officer said: “Tata Steel Consolidated revenues for the quarter stood at Rs 55,682 crore and consolidated EBITDA stood at Rs 4,315 crore, which translates to an EBITDA margin of 8%. India business generated higher margin of around 20% and EBITDA stood at Rs 6,841 crore. In Europe, margins moderated especially in UK business while Netherlands business was broadly stable on QoQ basis.Our capital expenditure was Rs 4,553 crore during the quarter and Rs 8,642 crore for the half year. This is broadly in line with our annual guidance of Rs 16,000 crore for FY24 and we continue to prioritise completion of the 5 MTPA Kalinganagar expansion. Our net debt stands at Rs 77,032 crore and the group liquidity position remains strong at Rs 27,637 crore. We have also taken a charge of Rs 6,358 crore in consolidated financial statements in relation to the UK business.”