Tata Steel witnessed net loss of Rs 2127 crore over global supply glut

Tata Steel declared its Q3FY16 results on February,04. The company's revenue declined by 16.63 per cent to Rs 28039 crore in Q3FY16 as compared to same period in previous financial year. Its total expenditure decreased by 10.78 per cent to Rs 27263 crore in Q3FY16 on a yearly basis.

Tata steel's EBITDA dropped by 74.79 per cent to Rs 776 crore in Q3FY16 as compared to same period in previous fiscal year. The company's EBITDA margin contracted by 638 basis points to 2.77 per cent in Q3FY16 on a yearly basis.It witnessed exceptional loss of Rs 718 crore on writing down of fixed assets in Europe. Tata Steel reported net loss of Rs 2127 crore in Q3FY16 against net profit of Rs 157 crore in Q3FY15.

Considering nine month financials, Tata Steel witnessed deliveries reduced by 1.4 per cent from 19.25 million tonnes (MnT) in 9MFY15 to 18.98 MnT in 9MFY16. The company's topline decreased by 17.19 per cent to Rs 87644 crore in 9MFY16 as compared to same period in previous financial year. Its EBITDA too reduced by 51.06 per cent to Rs 5380 crore in 9MFY16 on a yearly basis. However, Tata Steel's other income increased by almost six times to Rs 3797 crore in 9MFY16 as compared to same period in previous fiscal year. The company's net profit declined drastically by 94.27 per cent to Rs 100 crore in 9MFY16 on a yearly basis. Its net debt stands at 75118 crore as on December 2015 quarter.

Tata Steel's European business witnessed EBITDA loss of Rs 675 crore in Q3FY16 largely due to sharp deterioration of market spreads in Q3 FY16 to Euro 180 (Rs 13622) per tonne from Euro 207 (Rs 15666) per tonne in Q2 FY’16.

The global steel prices have reduced sharply from about USD 460 per tonne to around USD 260 per tonne in line with the surplus supply and the sharp decline in raw material prices. China is dumping steel to the world and unfairly dealing with import prices disturbing the demand-supply balance in many regions.

The share price of Tata Steel declined by 4.93 per cent on bourses in early trades; and is trading at Rs 228.3 on an intraday basis.

Tata Steel is engaged in manufacturing of steel and steel products. The company's products include hot rolled coils, cold rolled coils, wire rods and rebars, and galvanized coils. Its segments include steel, ferro alloys and minerals, and others. Tata Steel's other business segments consists of tubes, bearings, refractories, pigments, port operations and town services, among others. Its Indian operations are mainly carried out from Jamshedpur in Jharkhand with manufacturing divisions in Kharagpur (West Bengal), Joda and Bamnipal (Odisha), and Tarapur (Maharashtra). Its international production capacities are located in Europe and Asia Pacific.