Tata Steel rose 1.15% to Rs 401.65 at 11:50 IST on BSE after the company announced equity partnership for its Canadian iron ore mines, significant milestone in Kalinganagar India and continued pursuit of its European strategy.
The announcement was made after market hours yesterday, 27 October 2016.Meanwhile, the BSE Sensex was up 30.63 points, or 0.11%, to 27,946.53.
On BSE, so far 4.07 lakh shares were traded in the counter, compared with average daily volume of 9.55 lakh shares in the past one quarter. The stock hit a high of Rs 404.30 and a low of Rs 397.60 so far during the day. The stock hit a 52-week high of Rs 431.65 on 20 October 2016. The stock hit a 52-week low of Rs 211.30 on 12 February 2016. The stock had outperformed the market over the past 30 days till 27 October 2016, rising 4.56% compared with 1.33% decline in the Sensex. The scrip had also outperformed the market in past one quarter, rising 11.94% as against Sensex's 0.48% decline.
The large-cap company has equity capital of Rs 971.22 crore. Face value per share is Rs 10.
Tata Steel Minerals Canada together with its parent companies signed definitive agreements for concluding investments of $125 million Canadian dollars as equity and $50 million Canadian dollars as debt with Government of Quebec's investment entities, Resources Quebec (RQ) and Investment Quebec (IQ) respectively, totaling $175 million Canadian dollars.
Tata Steel has invested in Eastern Canada to set up mining operations across several deposits straddled across the Quebec-Newfoundland and Labrador- peninsula and multiple processing facilities including a beneficiation plant. The project has consequently enabled the development of infrastructure facilities including rail, roads, telecommunications and Port that has had significant positive impact in the socio economic landscape in Quebec and NeMoundland and Labrador.
The investment will result in an 18% equity stake for Resources Quebec in Tata Steel Minerals Canada in line with the carrying value of the investment in Canadian iron ore assets for Tata Steel. Consequently, the shareholdings of Tata Steel and New Millennium Iron will be adjusted to 77.68% and 4.32% respectively.
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Meanwhile, the company said that over the last few days, it has received several queries with respect to news reports regarding potential asset impairment, its European Strategy and its India operations. Tata Steel has clarified to the stock exchanges that its financial statements are prepared every quarter on a going concern basis and present a true and fair view of the state of affairs of the company. These financial statements are duly reviewed by the audit committee and approved by the board of directors of the company.
As part of the preparation of financial statements, the value-in-use of the assets of the company are tested for impairment as per the applicable Accounting Standards. Based on the above assessments and triggered by severe challenges in the underlying macro-economic and business conditions especially in Europe for several years post the global financial crisis the company has taken several impairment provisions in the recent years which have been duly recognized in the financial statements.
In accordance with IND-AS 101, on transition, the company elected fair value as deemed cost of certain assets including property, plant and equipment and investments in subsidiaries as at April 1, 2015. The net changes in the above have been reflected in the opening reserves on transition. As per the company's policy, in future, if there are further impairment indicators, the company in accordance with the Indian Accounting Standards would undertake the comparative assessment of the fair value and the value in use of the assets and recognize the difference as per the applicable Accounting Standards and disclose appropriately.
Tata Steel's India operations have recently achieved a major milestone of production of 1 million tons of Hot Metal in the new greenfield steel plant in Kalinganagar, Odisha in less than six months of formal commissioning of the facilities. Similar ramp up in production has been achieved in the steel making facilities in Kalinganagar and in the last month, the combined monthly sales of Tata Steel Jamshedpur and Kalinganagar crossed 1 million tons for the first time.
In response to the recent media reports, Tata Steel would also like to clarify that it continues to pursue its European consolidation strategy and the talks with thyssenkrupp AG for a potential joint venture of its European steel business are currently ongoing and progressing. However, there can be no guarantee that these talks will result in a definitive agreement between the parties.
Tata Steel UK is also deeply engaged with all relevant stakeholders in the UK to find a structural solution and a way forward with regard to the affordability of the legacy pension scheme liabilities. A successful outcome of the above engagement would significantly help in developing the foundation for a sustainable future for the UK business. Tata Steel would also like to reaffirm that it is currently pursuing a separate process for the potential sale of the South Yorkshire-based Specialty Steels business in the UK. Any further announcement on the matter will be made at an appropriate time. In the meanwhile, the management team and the employees of the company continue to work on improving the underlying performance of the European business amidst challenging business conditions.
On a consolidated basis, Tata Steel reported net loss of Rs 3183.07 crore in Q1 June 2016 as against net loss of Rs 316.91 crore in Q1 June 2015. Net sales declined 5.7% to Rs 25155.98 crore in Q1 June 2016 over Q1 June 2015.
Tata Steel is Europe's second largest steel producer, with steelmaking in the UK and Netherlands, and manufacturing plants across Europe. The combined Tata Steel group is one of the world's largest steel producers.
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