Tata Steel's consolidated net loss plunged to Rs 6,528.51 crore for the quarter ended March, 2013, as it took Rs 8,355.91 crore one-time impairment on non-current assets, primarily related to European operations.
The Tata group company had reported a consolidated net profit of Rs 433.46 crore for the same quarter of 2011-12. Its standalone net profit, which is Indian operations of Tata Steel, also declined by over 16 per cent to Rs 1,309.21 crore during the quarter vis-a-vis Rs 1,560.51 crore of Q4 of FY'12 as it made a one-time provision of Rs 686.86 crore on diminution in value of investments/doubtful advances.
In a separate statement, Tata Steel said that performance of its European operations has improved during the last quarter and its quarterly deliveries stood at 3.42 million tonnes (MT) in the fourth quarter compared to 3.02 MT of the third quarter.
Noting that the euro zone crisis has pushed European economy into a recession, Tata Steel said that current steel demand is almost 30 per cent 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 cash flow expectations and the valuation of the Groups' European operations," it further said.
Reflecting these conditions, Tata Steel took an impairment charge of Rs 8,356 crore in the last quarter.
"This is a non-cash charge and does not affect any of its financial covenants and its funding position. A significant portion of this impairment charge relates partly to the goodwill created on the acquisition of Corus Group plc in 2007...," the company said.
The impairment also includes the effect of write down of assets in the ferro-chrome business in South Africa and the mini blast furnace in Tata Steel Thailand.
Few days back, Tata Steel had announced that it will be taking $1.6 billion non-cash write off in its financial numbers for the last quarter.
Consolidated net sales of the company rose less than one per cent during the quarter at Rs 34,180.05 crore as compared to a net sales of Rs 33,860.08 crore of January-March period of FY'12 due to subdued steel demand, particularly in Europe.
Tata Steel's net sales in India rose over 13 per cent during the quarter at Rs 10,602.88 crore vis-a-vis Rs 9,375.91 crore of Q4 of FY'12.
For the financial year ended March 31, 2013, the company reported a consolidated net loss of Rs 7,057.62 crore as against a net profit of Rs 5,389.77 crore, largely due to the $1.6 billion impairment.
Net profit of Tata Steel's Indian operations also declined by over 24 per cent to Rs 5,062.97 crore in the last fiscal year vis-a-vis Rs 6,696.42 crore of FY'12.
Tata Steel's total annual steel deliveries in the last fiscal year were 24.13 MT, a little less than 24.22 MT of 2011-12.
Deliveries during the last quarter rose 5.6 per cent at 6.56 MT.
The company also said that despite weak market demands, its Indian operations recorded robust performance due to ramp up of its 2.9 million tonnes per annum expansion. Its fourth quarter deliveries rose by 28.9 per cent at 2.28 MT, while the annual deliveries were up 12.8 per cent to 7.48 MT in FY'13.
Tata Steel managing director H M Nerurkar said that the company will be commissioning its under-construction new plant in Odisha on schedule.
The company also announced that it will not be proceeding ahead with its greenfield steel project in Vietnam in the near future though did not spell out the reasons.
During the last fiscal year, the company raised Rs 31,799 crore debt from various banks and financial markets taking its gross debt to Rs 66,074 crore. Net debt at the end of March, 2013, was Rs 55,421 crore.