Tata Steel

The company shocked everyone with a massive consolidated net loss for Q4FY13 at Rs.6528 crore, compared to a net profit of Rs.433.40 crore in Q4FY12.  And the market would be more or less prepared for this as last week itself, the company had announced that it was taking on an impairment charge of Rs.8355 crore provision for impairment  of non-core business. But for this charge, Tata Steel would have actually ended the quarter with a net profit.  Sales grew less than 1% (YoY) at Rs.34180 crore. This impairment charge was on account of the slowdown in Europe and UK where, compared to the pre-2008 crisis, demand is down 30%. The impairment charge also is partly for the goodwill created on acquisition of Corus in 2007. This also includes write down of assets in the ferro-chrome business in South Africa and the mini blast furnace in Tata Steel Thailand.

The good part is that its Indian operations did well in terms of expansion in topline, which rose 13%  at Rs.10,602.88 crore but once again, here too, a one-time provision of Rs 686.86 crore on diminution in value of investments/doubtful advances pulled down the bottomline – net profit was at Rs.1309 crore, down 16% (YoY).  The impairment affected the performance for FY13 too, which ended with a consolidated net loss at Rs.7058 crore. Looking ahead, if operationally things remain good, with no other one-off charges, the company could do well in current fiscal. Its Indian operations deliveries totalled 7.48 million tonnes in FY13, up 13% (YoY) and Q4Fy13 deliveries rose 21% (QoQ) and 29% (YoY). And its European operations deliveries totalled 13.07 million tonnes in FY’13, down 7%, mainly on account of repairs and outages at the operations. However, with the relighting of the Blast Furnace at Port Talbot in February, there was an increase in production and deliveries in Q4 FY’13. Q4 FY’13 deliveries increased to 3.42 million tonnes compared to 3.02 million tonnes in Q3 FY’13 and 3.55 million tonnes in Q4 FY’12. Its South East Asian operations’ restructured its operations in Australia and China to turnaround its performance.

During the year, it successfully implemented its 3mtpa brownfield expansion at Jamshedpur which increased its total capacity to 10mtpa. Full ramp up of the capacity was achieved in March 2013. An incremental 1 million tonnes of steel was produced during the year, taking the total production to 7.94 million tonnes. It is now embarking on its next phase of growth and is setting up a 6mtpa greenfield steel project in Odisha. A new subsidiary, Tata Steel Odisha, has been set up specifically for this project. The project will be implemented in 2 phases of 3mtpa each. It has also decided that it will not proceed with its greenfield steel project in Vietnam in the near future. Net debt at end of FY13 stood at Rs.55,421 crore v/s Rs.47,657 crore at end of FY12. Cash and cash equivalents as of March 31, 2013 was at Rs.10,652 crore.