Tata Steel today reported a consolidated net loss of Rs 2,127.23 crore for the quarter ended December 31, 2015 hit by subdued demand in India as well as higher regulatory costs and a strong British pound. Mumbai-based firm had a net profit of Rs 157.11 crore in the year-ago period.
Total consolidated income of the steel maker declined by 17 per cent to Rs 28,039 crore in the October-December quarter of this fiscal, from Rs 33,633 crore during the same quarter in 2014-15, Tata Steel said in a BSE filing. Its total expenses more than doubled to Rs 1,224.90 crore from Rs 578 crore during the quarter under review.
“Indian steel demand remained subdued post monsoon quarter due to sluggish uptick across key steel consuming sectors like construction, general engineering and infrastructure,” Tata Steel said.
Rural demand also remained muted. Oversupply in global steel markets coupled with relative stability of Indian rupee versus dollar as compared to other and currencies has made India a favoured import destination, it added.
On its European operations, the firm said: “Surging imports into Europe exerted further pressure on margins in the last quarter. “The unprecedented market conditions, made worse by the UK’s regulatory costs and strong pound, led to announcements to reduce jobs and mothball assets in the UK part of an ongoing transformation programme.”
Tata Steel’s Managing Director India and South East Asia T V Narendran said: “Steel markets in India have been affected by depressed international steel prices and predatory imports. Tepid demand among steel consuming sectors has further exacerbated the problem.”
To realign Tata Steel with new market realities, the firm is sharpening focus on effective management of costs. It will also continue to invest in its marketing franchise and in increasing the share of value added products, he added.
Tata Steel in Europe CEO and Managing Director Karl Ulrich Kohler said: “This perfect storm (imports) caused the deterioration of our financial performance in the last quarter and led to us announcing restructuring in the UK where our operations also face higher regulatory costs.”
Growing European steel demand continues to be undermined by a flood of imports. Chinese steel shipments into Europe leapt over 50 per cent last year, while imports from Russia and South Korea jumped 25 per cent and 30 per cent, respectively, he added.