Tata Steel posts Rs 1,096 crore Q4 net loss: Key takeaways

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Mumbai: Steel maker Tata SteelNSE -0.93 % swung to a net loss in the quarter ended March on Monday, compared to a net profit in the same quarter a year ago.

The company posted a consolidated net loss of Rs 1,095.68 crore for the quarter ended March 31, compared with a net profit of Rs 2,430.92 crore in the corresponding quarter last year.

Here are the key takeaways from Tata Steel’s March quarter results:

Revenue drops
Consolidated revenue of the company declined 20.40 per cent year-on-year (YoY) to Rs 33,769.95 crore in Q4FY20, over Rs 42,423.86 crore in Q4FY19.

Dividend
The board recommended a dividend of Rs 10 per ordinary share of Rs 10 each and Rs 2.504 per partly paid ordinary share for the financial year ended March 31.

Steel production rises sequentially
The consolidated steel production increased by 5 per cent QoQ to 7.37 million tons and deliveries stood at 6.50 million tons. India steel production increased by 6 per cent QoQ to 4.73 million tons while deliveries stood at 4.03 million tons

Covid-19 impact
Operations at the group’s steel making facilities in India have been scaled down from the end week of March 2020 due to the lockdown, Tata Steel said. It further added that the group’s overseas operations in Europe, South East Asia and Canada have also been scaled down over various periods and are being operated as per the local guidelines, wherever permitted.

“The lockdown has adversely impacted the group’s sales volume, mix and realisations in the various geographies it operates. During the current quarter, such impact was limited only to the later part of March 2020. However, with the continuance of lockdown during the first quarter of the financial year 2021, the group’s operation remained adversely impacted,” Tata Steel said.

Outlook
“While there will be a sharp drop in volumes in 1QFY21, we are seeing early signs of recovery and remain poised to leverage our position on normalization of business conditions,” MD & CEO T V Narendran said in a release.

“FY20 has been a challenging year. The Indian economy slowed down in the first half with key steel consuming sectors like automotive contracting sharply. While the economy began recovering in the second half, the outbreak of Covid-19 in end March led to unprecedented disruption and heightened economic uncertainty. We have recalibrated our operations in line with the evolving business environment and are focused on conserving cash while actively derisking the business,” he added.

Management commentary
“Given the heightened uncertainty due to the Covid-19 pandemic, we are focused on conserving cash and ensuring adequate liquidity to face potential disruptions in the operating environment. We have pivoted business decisions on cashflows and successfully driven cash neutrality in our operations by reducing spend, managing working capital and curtailing capital expenditure. We also raised additional funds of Rs.4,900 crores to build a contingency buffer. Our liquidity at the end of the year remained robust at Rs.17,745 crores including cash and cash equivalents of Rs.11,549 crores,” said ED & CFO Koushik Chatterjee.

European ops
In 4QFY20, revenues declined by 2 per cent QoQ to Rs 13,588 crores while EBITDA improved to Rs 65 crores compared to EBITDA loss of Rs 956 crores in 3QFY20.

Capex curtailed
Given the uncertain business environment, capex is being curtailed sharply and restricted to safety and sustenance projects, the company said adding that the capex plans will be revisited in H2 or when business conditions normalize.

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