Kolkata, (IANS) : Tata Steel on Monday reported a 10-fold jump in its net loss to Rs 3,183 crore in the quarter ended June 30, as compared to a net loss of Rs 317 crore in the corresponding quarter last year.
“Loss from discountinued operations of Rs 3,296 crore was recognised on account of divestment of Long Steel UK Limited. The sale was completed during the quarter,” said the steel producer, adding the total comprehensive income for the period was a loss of Rs 2,833 crores due to the divestment.
Its EBITDA (earnings before interest, tax, depreciation and amortisation) in the quarter stood at Rs 3,270 crore, up by 21 percent higher from the year ago period due to improved operating performance across India, Europe and Southeast Asia.
“The group performance improved significantly this quarter across all major geographies with consolidated EBITDA margins expanding by 520 basis points (bps) sequentially and by 280 bps 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 and it is heartening to mention that the Kalinganagar start up is progressing as per plan,” said Group Executive Director (Finance and Corporate) Koushik Chatterjee.
Company’s capital expenditure (capex) was at Rs 2,442 crore in June quarter. “Of this, Rs 1,118 crore was incurred in India, largely on the completion of the 3 mtpa greenfield steel plant in Kalinganagar and the related projects. Rs 679 crore was incurred in Europe,” it said.
Tata Steel UK is currently progressing with the divestment of the specialty steel business and the pipe mills in Hartlepool. The company said that it would continue discussions with industry players to explore options for a strategic collaboration through a potential joint venture.
“In Europe, the positive impact of the structural restructuring undertaken in the UK in the last 6 months along with a weaker pound, cost reduction measures and an effective hedging strategy on raw material imports have enabled the business to report better performance for the quarter,” Chatterjee said.
With the completion of the long products divestment, Tata Steel Europe will focus on being a premium strip player.
On the company’s performance in India, T.V. Narendran, Managing Director of Tata Steel India and Southeast Asia, said: “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.”
According to him, company’s auto business grew by 19 percent over the last year and branded products now contribute around 34 percent of overall sales.
Despite continued imports from China, the Southeast Asia operations have shown a significant improvement in the business due to the focus on downstream products and solutions, exports and effective management of spreads, he said.
On the business outlook, the steel manufacturer said that realisations in the current quarter (July-September) were expected to be affected by lower demand from large steel consuming sectors due to monsoons. Demand is expected to pick up post-monsoon and the festive season on the back of increase in disposable income.
“EU (European Union) economy is expected to continue to grow gradually though UK’s stronger growth may slow down following the referendum result,” the company said.