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Tata Steel plunges into loss of Rs 2,238 cr in Q1

Hit by a slump in demand due to global downturn, Tata Steel on Thursday plunged to a consolidated net loss of Rs 2,238.53 crore for the first quarter ended of this fiscal.

Mumbai: Hit by a slump in demand due to
global downturn, Tata Steel on Thursday plunged to a consolidated
net loss of Rs 2,238.53 crore for the first quarter ended of
this fiscal.

The company had posted a net profit of over Rs 3,900
crore in the same period in the previous fiscal.
Tata Steel, however, expressed guarded optimism that
steel demand will rebound and prices improve in the European
markets most of which are in recession. Tata Steel in 2007 had
acquired for USD 12.2 billion Aglo-Dutch steel firm Corus,
which utilises only 55 per cent of total installed capacity
due to slump in demand.

"The results of Tata Steel Group for the quarter ended
June reflects the impact of the global economic downturn,
particularly in the developed markets," Tata Steel Managing
Director B Muthuraman said in a statement here.

Tata Steel Europe`s CEO Kirby Adams said the unexpected
termination of the Teesside off-take agreement by a consortium
of buyers cost Tata Steel Europe Rs 244 crore in EBIT and Rs
742 crore in operating cash flows.

Tata Steel`s sales volume during the period under review
dipped by 37 per cent to 5.443 million tonnes from 8.603
million tonnes, mainly due to 48 per cent decline in sales in
its European operations. Sales in NatSteel and Tata Steel
Thailand also fell. Sales in India went up by 22 per cent.

As a result, total income declined to Rs 23,292.31 crore
for the quarter ended June 30, 2009 against Rs 43,496.17 crore
in the same period last fiscal.

Tata Steel Chairman Ratan Tata, at the company`s AGM said
that there were signs of recovery in demand and firming up of
prices in the European market.

"But, it would be too early to say that the worst is
over," he said.
"It is difficult to say, when we will reach full capacity
utilisation (at Corus). But, I hope, by the end of the current
year, utilisation will be around 80 per cent and close to 100
per cent by the end of next year," Tata said responding to a
query by a shareholder.

Tata Steel had to trim production at Corus due to demand
contraction in the developed markets.

"We anticipated that the first two quarters of the
current year would be difficult for European steelmakers,
which is why we started taking action early this calendar year
to allign our output and costs to the lower demand levels of
Europe," Adams said.

Tata said that Tata Steel was trying to ensure 50 per
cent of the raw material security at Corus from captive
sources by 2015 against nil now. Coal and iron ore are the
primary raw materials for making steel.

Tata Steel said its overall liquidity position at present
is USD 3,638 million and the net debt of the group as on June
30, 2009 stood at USD 10,265 million. It does not have any
"material payments" to make in the next 12 months.

The company said its recent GDR offering attracted demand
from quality investors enabling it to increase the offering
size from USD 400 million to USD 500 million.

The funds would be deployed in projects like ongoing
expansion of Jamshedpur and overseas mining assets.

"This deployment strategy would be value accretive to
the company`s shareholders in the future," Tata Steel said.

Bureau Report

From Zee News

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