Tata Steel logs humongous loss of Rs 6,528 cr in quarter
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Tata Steel's consolidated net loss plunged to Rs 6,528.51 crore for the quarter ended March, 2013, as it took Rs 8,355.91 crore one-time impairment on non-current assets, primarily related to European operations due to the Eurozone crisis.
The Tata group company had reported a consolidated net profit of Rs 433.46 crore for the same quarter of 2011-12.
Its standalone net profit, which is Indian operations of Tata Steel, also declined by over 16 per cent to Rs 1,309.21 crore during the quarter vis-a-vis Rs 1,560.51 crore of Q4 of FY'12 as it made a one-time provision of Rs 686.86 crore on diminution in value of investments/doubtful advances.
In a separate statement, Tata Steel said that performance of its European operations has improved during the last quarter and its quarterly deliveries stood at 3.42 million tonnes (MT) in the fourth quarter compared to 3.02 MT of the third quarter.
Noting that the Eurozone crisis has pushed European economy into a recession, Tata Steel said that current steel demand is almost 30 per cent lower than the pre-2008 financial crisis level.
"These severely depressed conditions are expected to continue over the short-to-medium term and have led to a downward revision of cash flow expectations and the valuation of the Groups' European operations," it further said.
Reflecting these conditions, Tata Steel took an impairment charge of Rs 8,356 crore in the last quarter.
"This is a non-cash charge and does not affect any of its financial covenants and its funding position. A significant portion of this impairment charge relates partly to the goodwill created on the acquisition of Corus Group plc in 2007...," the company said.
The impairment also includes the effect of write down of assets in the ferro-chrome business in South Africa and the mini blast furnace in Tata Steel Thailand.