Home / Companies / Rs4,530 cr loss for Tata Steel in Q4

Mumbai: Tata Steel Ltd, India’s biggest steel producer, swung to a loss in its fourth quarter after incurring costs to reorganize operations at its UK unit Corus. The loss was Rs4,530 crore in the quarter ended 31 March, compared with a Rs1,230 crore profit in 2007-08.

A demand revival for Tata Steel in India, aided by infrastructure spending, failed to offset waning revenue at Corus, which provides at least two-thirds of Tata Steel’s output. Corus said on Thursday that any demand recovery in Europe is some time off and identified 2,045 jobs as being at risk.

Lagging demand: A file photo of Tata Steel’s Jamshedpur plant. A demand revival for Tata Steel in India, aided by infrastructure spending, failed to offset waning revenue at Corus. AFP

The shares fell 1.8% to Rs399.85 at close of trade in Mumbai. The benchmark Sensex index of the Bombay Stock Exchange fell 0.5%.

Tata Steel has risen 84% this year, compared with a 49% gain in the Sensex. The earnings were announced after the market closed.

Full-year net income, including, fell to Rs4,951 crore in the quarter ended 31 March from Rs12,350 crore the previous year, the Mumbai-based company said on Thursday in a statement. Sales rose 11% to Rs1.46 trillion.

Tata Steel said it incurred a reorganization cost of Rs4,095 crore for the year related to a programme at its European unit, where production has halved. Raw material costs rose to Rs41,530 crore from Rs33,260 crore. The company will pay a dividend of Rs16 a share.Global crude steel output fell 21% in May from a year earlier, the World Steel Association said on 19 June.

Tata, which became the world’s sixth biggest steel maker after buying Corus, last month said it may shut its Teesside Cast Products unit in the UK, threatening 2,000 jobs after Marcegaglia SpA, a privately-held firm, Dongkuk Steel Mill Co. Ltd, South Korea’s third biggest producer of the alloy, Duferco Participations Holding Ltd and Alvory SA abandoned a purchasing contract to buy 78% of the products.

Earnings in the current quarter may rebound, helped by demand in India, as the government increases spending on public works.

India’s steel demand may gain as much as 10% this fiscal year, almost double the pace previously estimated, steel secretary Pramod Rastogi said on 11 June.

“In India, Tata Steel will sell 20-25% more this fiscal because of additional capacity addition," Tata Steel’s managing director B. Muthuraman, said.

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