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Tata Steel’s net losses drop in 2016 Q1, declares Rs. 8 dividend

Jamshedpur, May 25: Tata Steel Ltd, India’s largest steel manufacturer, on Wednesday declared its Consolidated Financial Results for the entire fiscal 2015-2016 as well as the fourth quarter of FY 2016. According to a press communiqué issued by the steel maker, it reported a net loss worth Rs 3,214 crore during between January and March 2016 compared to Rs. 5,674 crore during the corresponding period last year.

The steel manufacturer recorded deliveries of 25.92MT for the fiscal 2015-16 and 6.94MT for 2016 Q1, thanks to strong performances in India. The total turnover was Rs. 117,152 crore for the year and Rs. 29,508 crore for the quarter.

The Kalinganagar Steel Plant has started commercial production and the stabilization process is currently underway.

Tata Steel declared an equity dividend of Rs. 8 per share.

Despite muted market environment, Tata Steel India operations recorded strong growth in the quarter and grew by 16% on the back of surge in volumes in high value segments like auto (19% q-o-q growth) and branded products (19% q-o-q growth).

For FY16, India deliveries increased by 9% with best ever sales of 9.54MT far in excess of the market which grew at 4.5% over the period. This growth was achieved despite heightened competition as India saw an increase in net imports by over 200% in this period and a reduction in the share of domestic players to 84%. Domestic steel prices in India declined compared to previous quarter and the impact of the MIP did not reflect in the market prices.

Tata Steel India saw strong growth across segments. Automotive and special products sales reached highest ever sales of 1.43MT and contributed 15% of total sales. Branded Products and Retail sales surged to 3.35MT and contributed around 35% of total sales. The company’s largest brand TISCON’ registered highest ever sales of 2.51MT for FY16, a growth of 13%. Our retail customers increased to around 30 lakh households across India.

Tata Steel Europe

Considering the challenging situation faced in Europe, the company has taken several steps to restructure the European operations, which are as below:

Tata Steel UK Limited signed an agreement with Greybull Capital to sell its Long Products Europe business. The deal will be completed once a number of outstanding conditions have been resolved, including transfer of contracts, certain Government approvals and the satisfactory completion of financing arrangements.

The Tata Steel Europe Board under the advice of the Tata Steel Board is actively reviewing all options for the Tata Steel UK Business including a potential sale of the business.

Kalinganagar Steel Plant

The Tata Steel Kalinganagar Steel Plant has been commissioning various facilities over the last few months. While the trials at the Hot Strip Mill had commenced in October 2015 , the sinter plant commenced production on 14th Jan’16 and the hot metal production was initiated on 2nd March’16.

Tata Steel on Wednesday also announced the start of commercial production at the 3MTPA Kalinganagar Steel Plant. The stabilization process is currently underway. The facility will produce flat steel for high end applications enabling the Company to expand its product portfolio in the ship building, defense equipment, energy and power, infrastructure, and aviation sectors. It will also consolidate Tata Steel’s leadership position in the domestic automotive segment.

T V Narendran, managing director of Tata Steel India and South East Asia, said, “Tata Steel recorded its highest ever sales at 9.54MT in FY16 and successfully consolidated its market share despite extremely challenging market conditions. Sales in 4Q increased by 16% with strong growth in key segments such as automotive and branded products.”

He added, “We continue to invest and build on the equity we have in the market place. Cost improvement initiatives and downstream value addition across product/market segments remain an area of focus. The Kalinganagar facility is stabilizing fast and will enable us to further consolidate our presence in existing ‘high’ end market segments with additional volumes in FY’17. We are well positioned to serve the increase in demand due to overall economic growth and the expected thrust on infrastructure in FY’17.”

Koushik Chatterjee, group executive director (Finance and Corporate), said, “While the pressure on the product prices continued during the quarter both in India and in Europe, our operations during the quarter were very resilient across most of the geographies and have reported much improved underlying performance compared to the previous quarter.

The subsidiaries and affiliates of the Tata Steel group have also reported improved performance and have contributed to the consolidated earnings. As a result of better underlying performance, the EBIDTA earnings expanded by 470 basis points even under challenging market conditions.

While government intervention against unfairly priced imports in India has helped markets stabilize, the UK steel operations continued to be exposed to volatile currency and low priced imports into the country.”

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