Mumbai, Aug. 27: Tata Steel, the world’s sixth-largest steel producer, suffered an unexpected consolidated loss of Rs 2,208 crore for the three months ended June 30, 2009, as the global economic downturn led to lower prices and forced a cutback in production.

Analysts who had predicted a small profit during the quarter were surprised with the quarterly consolidated results (including Corus). The net loss of Rs 2,208.68 crore after minority interest and share of profit of associates compares with a profit of Rs 3,900.90 crore in the corresponding quarter of the last year.

Tata Steel chairman Ratan Tata said the loss reflected a continued squeeze in demand in the United States and Europe, adding that the company aimed to rationalise operations in Europe and optimise cost effectiveness. The Tata Steel scrip fell 5 per cent on the Bombay Stock Exchange to Rs 436.40 on Thursday.

Steel deliveries during the quarter fell 37 per cent on account of a fall in volume in Tata Steel Europe (erstwhile Corus). Tata Steel’s turnover for the first quarter of 2009-10 was Rs 23,292 crore against Rs 43,496 crore in the year-ago period. The 46 per cent drop in sales was attributed to a slump in demand in Europe and lower prices in India and Southeast Asia.

“The Tata Steel group is undertaking restructuring initiatives internally to emerge stronger in the near future. The global recovery is expected to be slow and the company will continue to focus on operating performance and liquidity management,” said Tata Steel managing director B. Muthuraman.

A statement said Tata Steel continued to have a robust liquidity position (including undrawn credit lines) of over Rs 16,750 crore on account of external capital raising and tight working capital management across geographies. Tata Steel’s net debt at the end of June was put at Rs 49,170 crore.

Demand in Europe had stabilised and crude steel production in the EU was around 25 per cent higher that the low point in December 2008.