Tata Steel Q2 consolidated net loss at Rs 2,719-cr
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Last Updated: Thursday, November 26, 2009, 20:54
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 current quarter.

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 construction spending.

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 Januray 2011.

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 billion.


First Published: Thursday, November 26, 2009, 20:54

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