Tata Steel posts Rs 4,609 crore loss in Q1

With much of the country locked down for most of the quarter, revenues were severely hit, falling 32% to Rs 24,289 crore as deliveries declined more than 20%.

In one of its worst performances, Tata Steel on Thursday reported a consolidated net loss of Rs 4,609 crore for the June quarter, higher than Bloomberg consensus estimates of Rs 2,276.83 crore. The steelmaker,however, generated free cash flows. Also, given the uncertain economic environment, Tata Steel has built up a liquidity buffer of Rs 20,144 crore including Rs 14,178 crore of cash & cash equivalents.

With much of the country locked down for most of the quarter, revenues were severely hit, falling 32% to Rs 24,289 crore as deliveries declined more than 20%.

MD & CEO TV Narendran said the firm re-calibrated operations and sales across geographies in line with underlying re-gulatory and market conditions.

“This had an adverse impact on our volumes and our margins,” Narendran said.

Koushik Chatterjee, ED and CFO Tata Steel said, the company responded swiftly to the pandemic in April and stayed focussed on cash flow management. “Despite the national lock down we generated a free cash flow during the quarter of Rs 700 crore post capex and other obligations and maintained net debt at the March 2020 level,” Chatterjee said.

The adjusted Ebitda (earnings before interest, tax, depreciation and amortisation) suffered a steep decline of over 81% year-on-year at Rs 1,038 crore. Tata Steel Europe’s performance was affected by lower deliveries and sharp decline in European spreads to an unsustainably low level impacting the adjusted Ebitda. The Ebitda margins collapsed to just 4.3% during the quarter versus 15.4% in the corresponding quarter last year.

With average steel realisations in India lower during the quarter, and volumes also lower, about Rs 2,000 crore of costs remained unabsorbed and have been charged to the profit and loss account.

Despite the drop in margins, there was a reduction in net debt of Rs 1,677 crore in India, including a reduction of Rs 577 crore and Rs 291 crore, respectively at Tata Steel BSL and Tata Steel Long Products.