Tata Steel has reported a consolidated net loss of Rs 6,511 crore in the second quarter of 2023-24, primarily due to impairment charges and shrinking profit margins in its European operations. This marks a significant downturn compared to the net profit of Rs 1,297 crore in the same quarter the previous year.
The company's consolidated total revenue from operations for this quarter was Rs 55,681 crore, a decrease from the Rs 59,877 crore reported in the same period the previous year. Despite these challenges, the India business segment maintained a higher margin of approximately 20 percent, with an EBITDA of Rs 6,841 crore. In contrast, margins in the UK business of Tata Steel Europe experienced moderation, while the Netherlands business remained relatively stable on a quarter-on-quarter basis. Revenue per ton declined in both geographies, but improved costs in the Netherlands helped maintain broadly similar margins.
Tata Steel acknowledged the potential impact of its Electric Arc Furnace route-based decarbonization project and restructuring efforts in Tata Steel UK. As a result, the company recorded an impairment charge of Rs 12,560 crore in its standalone financial statements and Rs 2,746 crore in its consolidated financial statements. Additionally, Tata Steel took a charge of Rs 3,612 crore towards restructuring and other provisions in its consolidated financial statements.
In September, the UK government agreed to provide a grant of £500 million to support Tata Steel in decarbonizing its Port Talbot project, which requires a total capital investment of £1.25 billion.
Tata Steel Europe (TSE) reported revenues of Rs 18,846.7 crore in the quarter, down from Rs 21,558.8 crore a year ago. In the company's India business segment, revenue was Rs 33,922 crore, a decrease from Rs 34,642.8 crore in the previous year. Crude steel production for Q2FY24 remained consistent on a quarter-on-quarter basis, but increased by 5 percent compared to the previous year, reaching around 5 million tons. Deliveries in this quarter amounted to 4.82 million tons, showing a slight increase from the previous quarter.
Tata Steel India delivered steady performance, with domestic deliveries increasing by 6 percent year-on-year, despite challenges related to volatility and seasonal factors during the quarter. Notably, the Auto and Branded Products & Retail segments achieved their best-ever 2Q sales, according to the company's CEO and MD, TV Narendran.
(With Agency Inputs)