Mumbai: Tata Steel Group on Thursday reported a net loss of Rs 2,719.8 crore for Q2 FY`10 as against a net profit of Rs 4,771.65 crore in the same quarter last fiscal owing to lower price and production of the alloy and the poor show at Teesside Cast Products plant (TCP) in England.
"Lower price and production are the reasons for the company`s net loss. But, the primary reason will be TCP, which adversely impacted the EBIDTA by around Rs 800 crore for the quarter alone," Tata Steel Group Chief Financial Officer Kaushik Chattejee said here on Thursday.
Tata Steel, however, is pinning hope on increased sales to see "a trend reversal" in the second half of the current fiscal as it anticipates "stability in price" and no likelihood of raising the capacity utilisation level, from 75 percent now, at its European operation.
"The capacity utilisation at Europe is likely to continue at the same rate in the remaining period of the current fiscal," Tata Steel Europe`s Managing Director and Chief Executive Officer Kirby Adams said.
Tata Steel Europe returned to the positive EBIDTA level in October, Adams said, hoping that it would remain positive in the third and fourth quarters of the current fiscal as well due to volume growth and cost reduction.
While production at Tata Steel Europe was at 7.1 million
tonnes in H1 FY`10 as compared to 12 million tonnes in the
same period last fiscal, Tata Steel India had produced 3.14
million tonnes in the first half, up from 2.61 million tonnes
in the first half of the previous fiscal.
Revenue at Tata Steel Europe increased to USD 3.5 billion
in the second quarter as compared to USD 3.2 billion in the
first quarter. It`s revenue was at USD 6.7 billion in the
first half, down by 51 percent as compared to USD 13.7
billion in the same period last fiscal.
The Group`s total turnover was at USD 5.2 billion in the
second quarter ended September 30, 2010 as against USD 4.8
billion in the first quarter of the current fiscal.
On TCP, Adams said the company was in the process of
finalising a long-term plan for the plant, in which the
options of redevelopment, mothballing or joint venture
redevelopment were open.
However, he said that TCP was likely to break even in the
Tata Steel Europe had earlier found two potential buyers,
who subsequently cancelled the MoU in June 2009, leaving the
plant in the lurch.
Tata Steel Managing Director HM Nerurkar said that the
company would continue to look at higher volumes in its
operations in India and South-East Asia.
Nerurkar said that Tata Steel would continue to focus on
higher volumes and realisations in India and South-East Asia
as rebound in regional economies might positively impact on
Assured on Orissa Project
On the proposed greenfield project in Orissa, Nerurkar
said the state government has "assured" the company to start
construction work at the site in the next 2-3 months.
The company, he said, has also decided along with its
partner Riversdale to carry out the Stage-one development of
the Benga coal mine in Mozambique at a cost of USD 270 million
and the production at the mine was expected to start from
Chatterjee said that Tata Steel, which is sitting on a
cash and cash equivalents of USD 2.2 billion, would seek to
reduce gross debt by USD two billion in the next 12 months.
"We plan to use the existing cash balance, raise capital
and sell non-core portfolio of the Group to reduce the debt,"
he said, declining to divulge further.
Chatterjee also said that the company would look at
de-risking the balance sheet through restructuring of existing
debts and use the existing cash to pay down high cost debt.
The net debt of the Tata Steel Group stands at USD 9.8