Mumbai: Tata Steel recorded a consolidated net loss of Rs 6,511 crore in the second quarter of the fiscal year 2023-24, marking a significant contrast from the Rs 1,297 crore net profit reported in the corresponding period of the previous year.
The company faced challenges due to both impairment charges and reduced profit margins in the European market, according to media reports.
We have assessed the potential impact of the EAF-based decarbonisation project and restructuring in UK. We have taken an impairment charge of Rs 12,560 crore in standalone financial statements and Rs 2,746 crore in consolidated financial statements. In addition, we have taken a charge towards restructuring other provisions of Rs 3,612 crores in consolidated financial statements, Tata Steel said in a press statement.
Consolidated Revenues for the half-year period ending September 30, 2023, amounted to Rs 1,15,172 crores. The company reported an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of Rs 10,437 crores, with an EBITDA margin of 9%.
For the July to September quarter, Tata Steel reported consolidated revenues of Rs 55,682 crores. The EBITDA for this period was Rs 4,315 crores, resulting in an EBITDA margin of 8%.
The company invested Rs 4,553 crores in capital expenditure during the quarter, bringing the total capital expenditure for the half year to Rs 8,642 crores. Notably, the company is currently in the process of implementing a 5 million tonne per annum expansion at Kalinganagar and a 0.75 million tonne per annum Electric Arc Furnace project in Punjab.
Tata Steels net debt stands at Rs. 77,032 crores. The group maintains a robust liquidity position, with Rs 27,637 crores in available funds. It is worth mentioning that the company has received Investment grade ratings from both Standard Poors and Moodys.
India1 operations contributed revenues of Rs 33,922 crores, accompanied by an EBITDA of Rs 6,841 crores. The EBITDA margin for this segment was an impressive 20%. Crude steel production reached approximately 5 million tons, showing stability on a quarter-on-quarter basis but exhibiting a 5% increase compared to the same period last year.
Deliveries amounted to 4.82 million tons, registering a slight uptick on a quarter-on-quarter basis, primarily driven by increased domestic deliveries. This growth was observed across various key end-use segments, despite seasonal factors.
In Europe, Tata Steel reported revenues of 1,812 million, but also noted an EBITDA loss of 242 million. Liquid steel production in the region totaled 1.95 million tons, with the quarter-on-quarter improvement attributed to enhanced operational efficiency in the Netherlands.
Deliveries in Europe stood at 1.81 million tons, experiencing a marginal decrease due to subdued demand and the ongoing reline of one of the blast furnaces at Ijmuiden. The reline process is expected to be completed in the third quarter of fiscal year 2024.
Tata Steel is committed to reaching net zero by 2045 and is pursuing decarbonisation of its operations in a phased manner calibrated to the regulatory framework and support from the government and customers in each country, it said in the statement.
Tata Steel plans to invest 1.25 billion in a scrap-based Electric Arc Furnace (EAF) at Port Talbot, UK, with a 500 million government grant (pending regulatory approvals). This transition will lead to a reduction of 50 million tons of direct carbon emissions over ten years.
Tata Steel Netherlands is collaborating with the Dutch Government on a decarbonization initiative, focusing on emission and health standards. They will soon submit a detailed proposal seeking regulatory and financial support, which is crucial for the projects viability. The Tata Steel Board will assess the project for approval based on the governments support.
Tata Steel is set to secure 379 MW of renewable power for its Indian operations. This move is expected to lead to a reduction of 50 million tons of carbon emissions over a span of 25 years.
