Tata Steel on Tuesday posted a steep fall of 84 per cent in its consolidated net profit at Rs 1,566.24 crore during the quarter ended March 2023, dragged by lower income. The steel major had reported a net profit of Rs 9,835.12 crore in the year-ago quarter, it said in a BSE filing. Tata Steel’s total income trimmed to Rs 63,131.08 crore from Rs 69,615.70 crore in January-March period of the financial year 2022-23. The company’s total expenses rose to Rs 59,918.15 crore from Rs 57,635.79 crore a year ago.
The board of the company also recommended a dividend of Rs 3.60 per equity share of Re 1 each to the shareholders for FY23, the filing said. Tata Steel Europe Limited (TSE), a wholly-owned indirect subsidiary of the company, has assessed the potential impact of the economic downturn in Europe caused by external factors, including higher inflation, higher interest rates and supply-chain disruption triggered by the war in Ukraine on its future business outlook for the UK and Mainland Europe (MLE) value chains.
The board has considered reasonably possible scenarios to stress test the financial position of both the UK and MLE businesses, including the impact of lower steel margins against the annual plan and the mitigating actions the Group could take to limit any adverse consequences to liquidity in the annual impairment assessments. Based on the assessment, the MLE business is expected to have adequate liquidity under all the reasonably possible scenarios considered. The outlook for Tata Steel UK Limited (TSUK”), a wholly-owned indirect subsidiary of TSE, however, is expected to be adversely impacted towards meeting its liquidity requirements and accordingly with respect to its ability to continue as a going concern.
In response to the challenging market and business conditions, TSUK continues to implement various measures aimed at improving its business performance and conserving cash including but not limited to ensuring adequate liquidity, if required, through available financing options, management of working capital, implementation of cost reduction measures and discussions with the UK government to seek adequate support for transition to green steel as part of its decarbonisation strategy. The progress of discussions with the UK government is also being monitored closely given that based on the initial and subsequent discussions it remains uncertain whether adequate support for the decarbonisation strategy would be agreed.
Given the risks and challenges associated with the underlying market and business conditions, the uncommitted nature of available financing options and the uncertainty with respect to whether adequate government support would be agreed, there exists a material uncertainty surrounding the impact of such adversities on the financial situation of TSUK. In a separate statement, the company said its net debt stands at Rs 67,810 crore.Tata Steel CEO & MD T V Narendran said FY23 saw India crude steel production growing to around 19.9 million tonnes (MT) with a 65 per cent share of company’s overall volumes. Deliveries were in line with production with domestic deliveries growing 11 per cent y-o-y and driving product mix improvement.
The quarter also saw strong momentum with deliveries growing by 9 per cent q-o-q to 5.15 MT. The company has multiple projects ongoing at various locations in India as Tata Steel works towards 40 MTPA by 2030, he said.Company’s ED & CFO Koushik Chatterjee said “Our consolidated revenues for the financial year were USD 30 billion. Revenues were broadly stable on y-o-y basis despite the heightened volatility in the operating environment. Consolidated EBITDA stood at Rs 32,698 crore, which translates to an EBITDA margin of 13 per cent and EBITDA per tonne of Rs 11,358.”
“In Europe, margins were broadly similar on q-o-q basis as improvement in costs was offset by drop in revenues, in part due to delay in ramp up of cold mill at Ijmuiden. Cash flow from operations before interest stood at Rs 11,260 crore driven by favourable working capital movement.” During the quarter, the company’s production was at 5.15 MT, up from 4.90 MT in January-March 2022, while sales rose to 5.15 MT over 5.12 MT a year ago Tata Steel is among the top six steel producing companies in India.