Steel major Tata Steel posted a surprise loss of Rs 2,501.95 crore in the quarter ended December 31 on a consolidated basis because of a margin squeeze in the European business and a noncash charge for deferred tax pertaining to the British Steel Pension Scheme.
The company had posted a net profit of Rs 9,598.16 crore in the year-ago period.
While the standalone business reported a profit of Rs 2,705 crore in Q3FY23, the European operations posted a negative earnings before interest, depreciation, tax and amortisation (EBIDTA) of Rs 1,551 crore compared with a positive EBIDTA of Rs 2,942 crore in Q3FY22.
The company said margins compressed as realisations moved lower even as total costs remain elevated.
Total income on a consolidated basis fell to Rs 57,354.16 crore in the October-December quarter from Rs 60,842.72 crore earlier. The company’s expenses rose to Rs 57,172.02 crore in the quarter under review from Rs 48,666.02 crore in the year-ago period.
In a separate statement, the company said its current debt level stands at Rs 71,706 crore.
During the quarter, Tata Steel spent Rs 3,632 crore on capex. The phased commissioning of its 6 MTPA pellet plant at the Kalinganagar site has begun, and work on 2.2 MTPA cold roll mill complex and 5 MTPA expansion is ongoing, the statement said. The work with respect to setting up a 0.75 MTPA electric arc furnace in Punjab has also begun.
“(In December quarter) The British Steel Pension Scheme (BSPS) with Tata Steel UK as sponsor has completed a substantial part of its de-risking journey with 60 per cent of its liabilities insured. The buyin transaction along with actuarial movements has resulted in a non-cash deferred tax expense of Rs 1,783 crore and increased the overall deferred tax expense for the quarter to Rs 2,150 crore,” the statement said.
Tata Steel’s consolidated steel production fell to 7.56 million tonnes (MT) in October-December 2022-23 from 7.76 MT a year ago.
Deliveries rose 11 per cent to 7.15 MT compared with 7.01 MT in the year-ago quarter.
Tata Steel CEO and MD T.V. Narendran said, “We delivered steady growth in India volumes despite the volatile operating environment.
“Domestic deliveries stood at around 13.7 MT in the first nine months of the financial year and were up 4 per cent y-o-y. In Europe, our deliveries were lower in 9MFY23 due to slowdown in demand. Recession concerns weighed on steel prices, which coupled with elevated energy costs affected our performance.”
