Tata Steel has reported a record loss of ₹4,648 crore in the June quarter against a profit of ₹714 crore logged in the same period last year, on the back of Covid-19 lockdown hitting both production and realisations.

Revenue was down 35 per cent at ₹23,812 crore (₹35,382 crore).

The average steel realisations in India were lower due to the Covid-19 impact during the quarter, and about ₹2,000 crore of costs were under-absorbed due to the lower volumes and have been charged to the profit and loss account, said the company.

Despite the drop in margins, there was a reduction of ₹1,677 crore in net debt in India, including a reduction of ₹577 crore and ₹291 crore at Tata Steel BSL and Tata Steel Long Products, respectively.

Tata Steel Europe’s performance was affected by the overall weakness in economic activities in Europe and sharp drop in spreads.

Liquidity buffer

Given the uncertain economic environment, Tata Steel has built up a liquidity buffer of ₹20,144 crore including ₹14,178 crore of cash and cash equivalents, the company said.

TV Narendran, CEO and Managing Director, Tata Steel, said while the fall in sales and production had hit margins, the company mitigated the impact by focussing on export markets.

Economic activity is gradually recovering. In India, the company has ramped up capacity utilisations to 90 per cent level with total sales in June exceeding FY20 average monthly sales and with increasing domestic sales. This will lead to an improvement in margins in coming quarters, he said.

While the risk of further Covid outbreaks remains, Tata Steel is cautiously optimistic and hopes that the worst is over, he said.

The consolidated adjusted EBITDA dropped to ₹1,038 crore.

During the quarter, the company raised ₹5,935 crore of long-term debt and further extended the maturity profile.

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