Write-down drags Tata Steel Q4 net

Company's European operations improve

Tata Steel Ltd reported a net loss of Rs 6,528.5 crore for the quarter ended March 31 against a profit of Rs 433.5 crore in the corresponding period last year. The company recorded a goodwill write-down of Rs 8,356 crore in the quarter on account of its operations in Europe and Southeast Asia. Income from operations stood at Rs 34,650 crore during the quarter against Rs 33,998 crore a year earlier. Total expenses were flat at Rs 31,751 crore versus Rs 31,912 crore in the year-ago period.

The Indian operations of Tata Steel reported a profit before tax of Rs 2,174 crore for the fourth quarter, compared with Rs 2,371 crore in January-March 2012. Earnings before interest, taxes, depreciation, and amortisation (Ebitda) for Tata Steel India stood at Rs 3,714 crore in the quarter versus Rs 2,975 crore.

The company’s European operations recorded an improvement. Total deliveries for the fourth quarter declined to 3.42 million tonnes (mt) against 3.55 mt a year ago. Despite this, Ebidta came in at Rs 613 crore in the quarter, up from Rs 146 crore in the year-ago period. Koushik Chatterjee, group chief financial officer, Tata Steel, said the macroeconomic environment in Europe continued to be challenging. Added Karl-Ulrich Kohler, managing director and chief executive officer of Tata Steel Europe: “Europe’s economic deterioration last year reversed the modest recovery in Europeans’ steel demand that had been going on since 2009 and our deliveries fell as a consequence.”

He said the company was consistently working on improving costs and developing differentiated products. The demand for steel in Europe is at 70 per cent of the pre-crisis levels, Kohler said. “The outlook for the current year doesn’t look great as well.” To fight the problem, Tata Steel Europe has been cutting on manpower and restructuring itself. The company developed 17 new steel products last year and plans to introduce 30 new products in the current financial year. Regarding the impairment charge of Rs 8,356 crore, Chatterjee said the company’s board deemed it fit to reassess the assets and goodwill. If in the future the situation in Europe improves, then the goodwill can be written back again, he added.

The Southeast Asian operations of the company were restructured as well. The company said its turnover for the fourth quarter ended  was at Rs 3,486 crore against Rs 3,152 crore in the corresponding period last year. Ebitda increased to Rs 224 crore against Rs 106 crore.

Net debt for the Tata Steel Group was Rs 55,421 crore versus Rs 47,657 crore at the end of March 2012. The company said it had completed the financial closure of its 6-mt-a-year Kalinganagar plant in Odisha. The company has also decided to withdraw its proposal to build a steel plant in Vietnam.