Tata Steel sees Rs 2,700-cr loss, to cut some debt

Tata Steel, for a consecutive quarter, has posted a consolidated net loss, of Rs 2,719.8 crore for the quarter ended September, compared with a net profit of Rs 4,703.6 crore in the corresponding quarter last year. Consolidated net sales during the period plunged to Rs 25,269.8 crore from the previous year’s Rs 44,050 crore, down 42.6 per cent.

The restructuring of business is continuously taking a toll. During the September quarter, it had to shell out Rs 911 crore as only restructuring costs. Poor performance in Europe contributed, too.

Compared with the June quarter, the market has improved for steel, said the company. The Indian and South East Asian operations did well. This helped it deliver 17 per cent more steel, at 6.2 million tonnes against 5.3 million tonnes in the previous quarter.

Kirby Adams, chief executive officer, Tata Steel Europe, said, “Steel demand in Europe and North America has started to recover from exceptionally low levels during Q2. While we expect that trend to continue, the recovery remains fragile, particularly in the UK and in construction markets.”

However, the group recorded profits on a consolidated Ebitda (earnings before interest, taxes, depreciation and amortisation) through the first half, doubling profits in the second quarter to Rs 402 crore from Rs 204 crore in the June quarter.

The company said the second half of the current financial year is likely to be better, with reduction in raw material costs, stable pricing, higher capacity utilisation and higher volumes.

To cut gross debt by $2 billion in a year
It aims to decrease gross debt by $2 billion (Rs 9,330 crore) in the next 12 months. The total is $12.89 billion (Rs 60,131 crore) at present.

Excluding the cash & cash equivalents and hedge on foreign exchange loan, it had a net debt of $9.9 billion (Rs 46,183 crore) as on September 30.

“The company will... restructure existing debts to reduce the risk of bunching repayment obligations... and raise capital to reduce overall leverage,” said Koushik Chatterjee, group chief financial officer. “One option will be to use our existing cash reserve.”

Tata Steel raised $1.54 billion (Rs 7,184 crore) in the first half of the current financial year. It issued a GDR of $500 million (Rs 2,332 crore) in the September quarter. Apart from this, the company also had issued Non-Convertible Debentures of $447 million (Rs 2,085 crore) and took a new term loan of $591 million (Rs 2,757 crore). It also issued commercial papers worth $104 million (Rs 485 crore).

It has also prepaid $570 million (Rs 2,659 crore) and aims to prepay another $180 million (Rs 839 crore)before March.