Tata Steel fell 1.53% to Rs 258.25 at 9:20 IST on BSE after the company issued a detailed statement on its position pertaining to the ongoing developments.
The announcement was made after market hours yesterday, 5 August 2015.
Meanwhile, the S&P BSE Sensex was up 17.89 points or 0.06% at 28,240.97.
On BSE, so far 56,000 shares were traded in the counter as against average daily volume of 10.79 lakh shares in the past two weeks.
The stock hit a high of Rs 262.65 and a low of Rs 256.70 so far during the day. The stock had hit a 52-week high of Rs 568.55 on 6 August 2014. The stock had hit a 52-week low of Rs 245.25 on 31 July 2015.
Tata Steel after market hours yesterday, 5 August 2015 in its update of recent developments said that while stoppage of despatches from the company's Noamundi iron ore mine in Jharkhand owing to differences with Jharkhand government will financially impact the company till the matter is resolved, the company has taken all measures to ensure that operations of its Jamshedpur steel plant are unaffected by the actions of the state government and the company remains committed to its customers and other stakeholders.
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Coming to the background of this issue, Tata Steel's captive iron ore mining leases in Odisha have been extended till 2030 in accordance with the provisions of the MMDR Amendment Act, 2015. However, the Government of Jharkhand has not yet allowed the execution of the supplementary lease deed for extension of the Noamundi iron ore mine in spite of several representations made by Tata Steel on the subject to the state government, the company said. The MMDR Amendment Act 2015 stipulates the extension of the captive mining leases up to 31 March 2030 from the date of expiry of the period of last renewal, Tata Steel said. Applying its own interpretation of the legislative and judicial pronouncements, Government of Jharkhand has stipulated certain onerous terms and conditions for allowing extension of the mining lease of Noamundi, which are not in conformity with MMDR Amendment Act 2015, Tata Steel said.
As the company did not accept the position taken by the Government of Jharkhand before and after promulgation of the MMDR Amendment Act 2015, the Department of Mines, Government of Jharkhand, has stopped the issuance of challans (forwarding notes) for despatch of iron ore from the company's Noamundi iron mine in Jharkhand to its steel plant at Jamshedpur. This has resulted in stoppage of despatches of iron ore from Noamundi to Jamshedpur steel plant. Tata Steel said it has decided to seek legal recourse to resolve this impasse.
With regard to developments in its European long products business, Tata Steel confirmed the negotiations about the potential sale of its European long products business and associated distribution facilities to Klesch Group have been discontinued. The company had been in talks with Klesch following the signing of a Memorandum of Understanding in October 2014, Tata Steel said. As of 2 August 2015, the long products business, with the associated distribution facilities, became a 100% subsidiary of Tata Steel UK, it added. With the hive down of the long products into a wholly owned subsidiary, the new structure will enable the company to evaluate and execute strategic options in the future, Tata Steel said.
On the issue of pension schemes in Tata Steel Europe, Tata Steel said that following the trade union recommendation to the members for the modification option changes to the British Steel Pension Scheme and the trade union members vote in support of this, Tata Steel UK, a subsidiary of Tata Steel confirms that the formal consultation with employees on the changes has been completed and that the trustee body and the company have made the amendments to the scheme to enable the benefit changes to be adopted.
On the issue of Stichting Pensioenfonds Hoogovens, Netherlands, Tata Steel said that on 7 July 2015, the execution agreement for the company's main pension scheme in the Netherlands, Stichting Pensioenfonds Hoogovens (SPH), was signed by Tata Steel's subsidiary Tata Steel Nederland BV and the SPH Board. The terms of this agreement will allow the scheme to be classified as a defined contribution scheme with effect from 7 July 2015 rather than defined benefit scheme, Tata Steel said.
On consolidated basis, Tata Steel reported net loss of Rs 5674.29 crore in Q4 March 2015 compared with net profit of Rs 1035.87 crore in Q4 March 2014. Net sales dropped 20.7% to Rs 33336.81 crore in Q4 March 2015 over Q4 March 2014. The company is scheduled to announce its Q1 June 2015 results on 11 August 2015.
Tata Steel Group is among the top-ten global steel companies with an annual crude steel capacity of nearly 30 million tonnes per annum.
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