Tata Steel, the world’s eighth-largest steel-maker, has reported a consolidated net loss of Rs 2,720 crore for the quarter ending September 2009.
Despite this loss and a net debt of over Rs 45,924 crore on its books, Tata Steel is hopeful of making a turnaround in the ongoing half year.
The company had a consolidated net profit of Rs 4,703 crore in the same quarter a year ago.
“Tata Steel aims to cut its gross debt by $2 billion (over Rs 9,302 crore) in the medium term. The company will prepay $180 million (over Rs 837 crore) of debt before March,” Group Chief Financial Officer Koushik Chaterjee said.
He also said the company would use existing cash to pay off high-cost debt and also look at raising funds. “As of September 2009, the liquidity position of the company is at over Rs 16,675 crore,” Chaterjee said.
“We are expecting a better performance in the second half of the financial year,” said Managing director of Tata Steel, HM Nerurkar. The EBITDA (earnings before interest, tax, depreciation and amortisation) turned positive in October.
Seeing stability in prices, the company expects 80 per cent capacity utilisation for the ongoing half year.
Tata Steel expects steel usage to improve by 9 per cent around 2010 and predicted that Brazil, India, China and West Asia would be drivers of this growth.
Kirby Adams, head of Tata Steel’s European operations, said that the EBIT (Earning Before Interest and Tax) loss of Teesside Cast Products (TCP) in first half of the present financial year was $220 million (over Rs 1,018 crore) and cash outflow was $144 million (over Rs 669.7 crore) as two potential buyers cancelled MoUs in June 2009.
“The litigation is on. Meanwhile, we see manufacturing output in Europe stabilising,” Adams said.
Corus accounts for over two-thirds of Tata Steel’s production. Shares of Tata Steel dropped Rs 18.7 or 3.3 per cent to close at Rs 543.4 per share at close.