Tata Steel on Tuesday reported a consolidated net loss of Rs 1,168 crore during the January-March quarter on the back of provisions made for restructuring, which led to an exceptional expense of Rs 4,068.6 crore. A Bloomberg consensus estimate of 14 analysts had pegged a profit for the quarter at Rs 988 crore.On the revenue front, however, the company beat estimates by reporting a 30.4% (y-o-y) growth, which came in at Rs 35,304.9 crore as compared to a consensus estimates of Rs 31,618 crore. The company, similarly, reported a 218% (y-o-y) jump in consolidated earnings before interest, taxes, depreciation and amortisation (Ebitda) with the Ebitda margin expanding by 1,170 bps to 19.8%. The company said its consolidated Ebitda/MT rose by 194% to Rs 10,228.
On a standalone basis, Tata Steel continued its impressive run as domestic deliveries rose 18% (y-o-y) in the March quarter led by industrial products, projects & exports vertical that saw a 47% (y-o-y) growth. Standalone revenue rose 45.9% (y-o-y) to Rs 17,113 crore while profit rose 172% (y-o-y) to Rs 1,415 crore. In Europe, while deliveries remained flat as compared to Q4FY16, revenue rose 14.8% (y-o-y) to Rs 15,244 crore. This, along with a 5.7% (y-o-y) drop in raw material cost, helped the company report an Ebitda of Rs 1,972 crore or an Ebitda/MT of Rs 6,932. In Q4FY16, Tata Steel Europe had reported an Ebitda loss Rs 355 crore.
Tata Steel said Rs 3,613.8 crore or 89% of the Rs 4,068.6 crore of exceptional expense during the quarter are curtailment charges related to the closure of Tata Steel Europe’s British Steel Pension Scheme to future accrual. At the end of March, the company had a gross debt of Rs 83,014 crore – an increase of Rs 1,017 crore over FY16 – and cash and cash equivalents of Rs 10,648 crore. Its net debt during the March quarter, however, decreased by Rs 4,313 crore. Tata Steel said it spent Rs 7,700 crore on capex during the year.
“The one time non cash charge was for curtailment of defined benefit scheme which is now defined contribution scheme. We are in a very positive consultation with the regulators, trustees and the pension protection funds. We are confident we will come out with the final agreement shortly. After the apportionment process there is plan to separate the scheme from the business, and also there is a potential for new scheme. However, there is no timeline for it as of now,” Koushik Chatterjee, Group CFO said at a press conference.
He said that the Ebitda growth, is an outcome of some very hard decisions taken last year. “Restructuring of the business, closure of loss making sites and facilities in Europe such as sale of loss making mills, and divestment of businesses. These are reflective of operational transformation programmes undertaken both in Europe and India,” Chatterjee added.