Tata Steel posts ₹1,615-crore loss on ₹3,141-crore provisioning

Our Bureau Mumbai | Updated on June 29, 2020

Lockdown has hit operations at Tata group’s facilities   -  Arunangsu Roy Chowdhury

Tata Steel has reported a net loss of ₹1,615 crore in the March quarter against the net profit of ₹2,295 crore logged in the same period last year on the back of ₹3,141-crore impairment charges and weak realisation.

Sales were down 20 per cent at ₹32,867 crore (₹41,186 crore). The company has announced a dividend of ₹10 per share and ₹2.504 per partly paid share.

Covid ravage continues

Post declaration of Covid as a pandemic by the World Health Organization and subsequent lockdowns, operations at the group’s steel making facilities in India, Europe, South-East Asia and Canada are being operated as per the local guidelines, wherever permitted.

The lockdown has impacted the group’s sales volume, mix and realisations in the various geographies it operates in. During the current quarter, such impact was limited only to the later part of March. However, with the continuance of lockdown in the June quarter, the group’s operations remained affected.

The group continues to monitor the situation and take appropriate action as necessary to scale up operations, said the company. The eventual outcome of the impact of the global health pandemic may be different from that estimated as on the date of approval of these financial results.

Tata Steel Europe, a wholly-owned subsidiary of the company, has assessed the potential impact of the downturn in steel demand due to the pandemic. Its UK operations are expected to be adversely impacted with respect to its ability to continue as a going concern and meet its liquidity requirements.

In response to the pandemic, TSE, including TSUK, continues to implement measures aimed at conserving cash, including but not limited to deferral of capital expenditures, reduction in administrative expenses, use of non-recourse securitisation programmes and seeking government backed funding.

Given the severity and length of the downturn, and steel demand on account of the pandemic remains unpredictable, the directors of TSE observed that while there is a reasonable expectation that TSE has adequate resources to continue as a going concern, there exists a material uncertainty surrounding the impact of the Covid pandemic on its financial situation.

Published on June 29, 2020

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