Tata Steel deep in red
Tata Steel on Thursday reported a sharply higher loss than anticipated by analysts for the quarter ended June 30 as the Covid-19 pandemic hit demand. The steel major posted a consolidated loss of Rs 4,609 crore compared with a net profit of Rs 695 crore in the same period of the previous year.
Analysts were expecting Tata Steel to post a net loss of around Rs 2,400 crore.
The loss came as total revenues slid to Rs 24,288.51 crore from Rs 35,947.11 crore in the year-ago period.
The effect of coronavirus and the resulting global lockdown was reflected in its operations with production falling to 4.93 million tonnes from 6.34 million tonnes in the same period of the previous year.
Tata Steel disclosed that the average steel realisations in India were lower because of the Covid-19 impact during the quarter and about Rs 2,000 crore of costs were under-absorbed because of the lower volumes.
The performance of Tata Steel Europe was also affected because of the overall weakness in economic activities in Europe and a sharp drop in spreads.
Bharat Petroleum Corp Ltd (BPCL) on Thursday reported nearly doubling of net profit in the June quarter after inventory gains offset a decline in refining margins and fuel sales.
The standalone net profit in April-June stood at Rs 2,076.17 crore compared with Rs 1,075.12 crore a year back.
The company earned $0.39 on turning every barrel of crude oil into fuel compared with a gross refining margin $2.81 a barrel a year ago in the same period of the previous year.
Fuel sales in the quarter that saw economic activity coming to a halt due to nationwide COVID-19 lockdown slipped to 7.53 million tonnes when compared to 11.11 million tonnes sales last year.
The company disclosed that to preserve cash flows and focus on disciplined capital allocation, it has curtailed growth capex for this year and the focus is primarily on safety environment and sustenance capital expenditure.
“During the quarter, we re-calibrated our operations and our sales across geographies in line with underlying regulatory and market conditions..Economic activity is gradually recovering. In India, we have ramped-up our capacity utilizations to 90 per cent levels with total sales in June exceeding 2019-20 average monthly sales. We are further ramping up capacity utilization and increasing domestic sales which will lead to an improvement in our margins in coming quarters’’, V Narendran, CEO & Managing Director, Tata Steel said.
Tata Steel disclosed that given the heightened economic uncertainty, it has ramped up the liquidity buffer to Rs 20,144 crore which will be deployed to deleverage as business conditions normalize.
“Tata Steel responded very swiftly to the pandemic in April and despite the national lock down in India, the company remained focus on its cash flow management to generate a free cash flow quarter and maintained its net debt at the March 2020 level. This was achieved through cross functional co-ordination and cash war room initiatives covering fixed cost reduction, working capital management through better inventory management, focus on debtors, working with suppliers and other initiatives. This enabled the company to generate free cash flow of Rs 700 crore post capex and other obligations’’, Koushik Chatterjee, Executive Director and CFO, Tata Steel said.