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Tata Steel in spotlight after Q4 results

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Last Updated : May 25 2014 | 12:00 AM IST

Tata Steel reported consolidated net loss of Rs 6529 crore in Q4 March 2013, as against net profit of Rs 433 crore in Q4 March 2012. Turnover rose 1.91% to Rs 34650 crore in Q4 March 2013 over Q4 March 2012. The result was announced after market hours on Thursday, 23 May 2013.

Tata Steel's consolidated earnings before interest, taxation, depreciation and amortization (EBITDA) rose 27.75% to Rs 4368 crore in Q4 March 2013 over Q4 March 2012. EBITDA margin improved to 12.6% in Q4 March 2013, from 10.1% in Q4 March 2012 and 7% in Q3 December 2012.

Tata Steel reported consolidated net loss of Rs 7058 crore in the year ended 31 March 2013 (FY 2013), as against net profit of Rs 5390 crore in the year ended 31 March 2012 (FY 2012). Turnover rose 1.36% to Rs 1.34 lakh crore in FY 2013 over FY 2012. EBITDA declined 6.49% to Rs 12654 crore in FY 2013 over FY 2012. EBITDA margin declined to 9.4% in FY 2013, from 10.2% in FY 2012.

Tata Steel monetised its portfolio by selling part of its stake in Titan Industries to realise profits of Rs 962 crore in FY 2013.

The primary reason behind Tata Steel reporting net loss in Q4 March 2013 and FY 2013 was due to the non-cash impairment charge of Rs 8356 crore in Q4 March 2013. Tata Steel said that the Eurozone crisis has pushed regional economies in Europe and UK into a recession and the current steel demand is almost 30% lower than the pre-2008 financial crisis level. These severely depressed conditions are expected to continue over the short-to-medium term and have led to a downward revision of cashflow expectations and the valuation of the Groups' European operations. Reflecting these conditions, the Group took an impairment charge of Rs 8356 crore in Q4 March 2013. This is a non-cash charge and does not affect any of its financial covenants and its funding position, the company said.

A significant portion of this impairment charge relates partly to the goodwill created on the acquisition of Corus Group plc in 2007 and partly to the assets of the business units that have been adversely affected by the severe contraction in demand, especially in the construction sector, Tata Steel said. The balance impairment relates to the assets in Tata Steel KZN in South Africa, Tata Steel Thailand and Tata Metaliks for Redi Plant, Tata Steel added.

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First Published: May 24 2013 | 8:53 AM IST

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