Tata Steel Q1 loss at Rs 3,183 cr on hit from UK biz

Tata Steel today posted consolidated net loss of Rs 3,183 crore for the quarter ended June 30, largely on account of its erstwhile entity Long Steel UK.
The steel major's operating profit or EBITDA (earnings before interest, tax, depreciation and amortisation) at 21 per cent was higher than the year-ago period due to improved operating performance in India, Europe and South East Asia.
It posted net loss after taxes, minority interest and share of profit of associates of Rs 3,183 crore for the April- June quarter of the current financial year, as against net loss of Rs 316.91 crore in the year-ago period.

Tata Steel's Europe division was sold at a loss of Rs 3,296.48 crore to Greybull Capital LLP. This loss was recognised in the first quarter.
The Tata Steel Group posted net profit of Rs 172 crore in the quarter under review from continuing business for the first time after several quarters, the company said.
Its total income fell by 6 per cent to Rs 26,406.10 crore during the quarter under review, as against Rs 28,025.43 crore in the year-ago period.

"Seasonal headwinds and a slowdown in a large steel consuming sector like real estate affected steel demand in the quarter. While the regulatory changes have helped stem the flood of imports, domestic supply has increased and added to the competitive pressure.

"The company's deliveries were stable this quarter and we successfully maintained our market share in our chosen high- end segments," Tata Steel India and South East Asia Managing Director T V Narendran told reporters here.
"Our auto business grew by 19 per cent over the last year and branded products now contribute around 34 per cent of overall sales. Stronger realisations and focus on value added products helped the business expand margins by 310 basis points and deliver an EBITDA of Rs 2,236 crore," he said.
Despite continued imports from China, the South East Asia operations have shown a significant improvement in the business due to focus on downstream products and solutions, exports and effective management of spreads, Narendran said.

Operations in India, Europe and South East Asia made positive contributions. EBITDA of Rs 3,270 crore, 65 per cent higher than the fourth quarter of 2015-16. It was 21 per cent higher than the first quarter of 2015-16 due to improved operating performance regions.
The first quarter EBITDA margin of 12.4 per cent expanded by 520 bps as compared to 7.2 per cent in fourth quarter of last fiscal. It was up 280 bps compared to 9.6 per cent in the first quarter of last fiscal.
"The Group performance improved significantly this quarter
across all major geographies with consolidated EBITDA margins expanding by 520 basis points sequentially and by 280 basis points over Q1, FY16 with all geographies contributing to the performance improvement.

"Despite muted market demand, our India business improved its underlying EBITDA performance by 310 bps compared to the previous quarter," Tata Steel Group Executive Director Koushik Chatterjee said.
The company tapped the Commercial Paper market in India to capitalise on lower yields in the short end of the market. Power purchase agreements of captive nature have also been classified as a finance lease under IND AS resulting in an increase in gross debt.
As of June 30, 2016, net debt increased to Rs 75,259 crore as compared with Rs 71,087 crore in March 31, 2016.
The company has incurred capex of Rs 2,442 crore in the first quarter of 2016-17. Of this Rs 1,118 crore was incurred in India, largely on the completion of the 3mtpa greenfield steel plant in Kalinganagar, Odisha and the related projects and Rs 679 crore was incurred in Europe.

Commenting on business outlook, Chatterjee said the realisations in the second quarter of are expected to be affected by lower demand from large steel consuming sectors such as construction and capital goods as well as seasonal sluggishness due to monsoons.
Demand is expected to pick up post-monsoon and the festive season on the back of increase in disposable income due to the Pay Commission award, good harvest and easier liquidity. Supply side pressures from domestic steel companies likely to cap realisations and keep industry mill utilisation levels under check, he added.