India’s largest private steel producer Tata Steel reported consolidated net loss of ₹1,236.17 crore for the March 2020 quarter a provision for impairment on asset held within the European operations, overseas mining and Indian operations. The company had reported net profit of ₹2,353 crore in the same period last year.
The loss was far higher than expected by the market. A poll of eight analysts by Bloomberg had forecasted consolidated loss of ₹90.76 crore for the January-March 2020 quarter.
For the full year FY20, Tata Steel’s net profit crashed 75% to ₹2336.69 crore, from ₹9187.29 crore in FY19, in a year marked with successive loss-making quarters, a failed joint venture with Thyssenkrupp to combine European steel making operations and an unprecedented demand slump in its Indian market.
While operating revenues dipped marginally in the quarter, from ₹35,520 crore in Q4FY19 to ₹33,769 crore in Q4FY20, the profit/loss account was dragged into negative territory with an impairment of ₹3,141.43 crore the non-current assets mentioned earlier.
In its notes to accounts, Tata Steel said that in view of the covid-19 pandemic and the related lockdown, operations at the group's steel making facilities in India have been scaled down from the end week of March 2020. “The group's overseas operations in Europe, South East Asia and Canada have also been scaled down over various periods and are being operated as per the local guidelines, wherever permitted. The lockdown has adversely impacted the group's sales volume, mix and realisations in the various geographies it operates. During the current quarter, such impact was limited only to the later part of March 2020. However, with the continuance of such lockdown during the first quarter of the financial year 2021, the group's operation remained adversely impacted."
For now, other than the impairment recorded, no significant impact on carrying amounts of property, plant and equipment, right-of-use assets, inventories, intangible assets, trade receivables, investments and other financial assets is expected, the company said.