Tata Steel Group narrows losses despite Rs 2,800-cr writedowns

Tata Steel Group today narrowed its consolidated net losses to Rs 3,214 crore for the March quarter, down from Rs 5,674 crore in the year-ago period, hurt by a Rs 2,800-crore writedowns and impairment costs towards its struggling global operations.
On the back of still lower alloy prices, total revenue from operations also came down 12 per cent to Rs 29,508 crore on lower steel prices from Rs 33,666 crore a year ago.
The company provided for a whopping Rs 2,800 crore under exceptional items for fixed assets mainly relating to operations in Europe, Canada and Asia as well as its exit cost from China and Australia during the quarter, group financial officer Koushik Chatterjee told reporters here late evening.

"We recognised Rs 2,800 crore under exceptional items during the quarter. Out of this we took a charge of Rs 1,185 crore at Tata Steel Europe largely related to the restructuring of the British operations and other impairment provsions elsewhere in Europe.
"We have also done about Rs 1,397 crore of write down of the assets that we have taken in our Canadian iron ore mines and about Rs 327 crore in Tata Steel India which was largely on account of provisions for the voluntary employee separation scheme," Chatterjee said.
On a standalone basis, the parent Tata Steel fared better had it not been for a Rs 326 crore VRS cost. Accordingly, net income slipped to Rs 676.60 crore in the March quarter from Rs 814 crore a year ago, while sales also slipped a bit to Rs 10,372 crore from Rs 10,523 crore due to fall in alloy prices.

Tata Steel India head T V Narendran attributed the slippages in the bottomline to the VRS scheme offered to its 1500 employees during the quarter involving a cash payout of Rs 326 crore.

Kalinganagar steel plant has started commercial production and the stabilisation process is currently underway, he said.
Narendran said the Kalinganagar plant will reach initial 3 million capacity over the next 18 months.
"Exceptional items comprise redundancy provisions of Rs 441 crore in Tata Steel Europe and non-cash impairment in some of the downstream businesses in Tata Steel Europe and Tata Steel Minerals Canada," the firm said, adding it also includes the exit costs on Chinese and Australian operations.

During the year, Tata Steel undertook a restructuring exercise involving 2,950 employees and already company has given VRS to 1,500 staffers at its various domestic operations, Narendran said.
The company incurred a capex of Rs 11,486 crore in the year, of which around Rs 3,695 crore were spent on the Kalinganagar greenfield project and Chatterjee said in FY2017, the capex would be "much lower than Rs 10,000 crore".
The firm's liquidity position remains strong with Rs 20,514 crore of cash or cash equivalents, including drawn and undrawn bank lines.
Its consolidated debt rose by Rs 6,000 crore to Rs 84,000 crore, while the net debt addition has been only Rs 1,500 crore during the year, primarily because of around Rs 5,000 crore of cash payments to the European operations, Chatterjee added.

The company continued to divest its non-core assets and raised about Rs 4,478 crore through their monetisation.
For the full year, its consolidated net loss was lower at Rs 3,049.32 crore against Rs 3,925.52 crore earlier. Total income was lower at Rs 1.17 lakh crore from Rs 1.40 lakh crore in the previous year. For the entire 2015-16 fiscal, its deliveries were lower at 25.92 MT against 26.32 MT in 2014-15.
Narendran sounded optimistic about FY17, saying he expects demand growth to continue and it may clip at over 6.4 per cent in the year on the back of improved business environment and the safeguard duty imposed by the government. He also said the company expects to produce 1 million tonne more this fiscal over the past year.