Tata Steel shares in focus after Rs 6,196 crore Q2 loss; stock down 9% in 1 month

Shares of Tata Steel Ltd, which are down 9 per cent in the last one month, will be in focus on Thursday morning after the Tata group firm posted a consolidated loss of Rs 6,511 crore for the September against analyst estimates of marginal losses. The hit was seen due to an exceptional loss of Rs 6,898 crore, which included a Tata Steel UK-related impairment charge of Rs 2,631 crore on Heavy End assets that are expected to be used only for a defined period.

Besides, Tata Steel also took a charge towards restructuring and other provisions amounting Rs 3,612 crore. Analysts were already expecting Tata Steel's numbers to be weakest among steelmakers due to poor volumes and realisation at Europe operations, but the print came in far below expectations.

The steelmaker said its consolidated revenue fell 7 per cent to Rs 55,682 compared with Rs 59,878 crore in the year-ago quarter.

In a press release, Tata Steel said: "We have assessed the potential impact of the EAF based decarbonisation project and restructuring in UK. We have taken an impairment charge of Rs 12,560 crore in standalone financial statements and Rs 2,746 crore in consolidated financial statements. In addition, we have taken a charge towards restructuring & other provisions of Rs 3,612 crore in consolidated financial statements," it said.

Tata Steel had in September announced its plans to invest in a scrap based EAF at Port Talbot, UK, at a cost of 1.25 billion pounds with a government grant of 500 million pounds. The transition to EAF based steelmaking would, Tata Steel said, result in reduction of 50 million tonne of direct carbon emissions over a decade.

Tata Steel noted that it has initiated informal discussions with trade union representatives explaining the impact of the restructuring proposal. Trade union Unite said on Wednesday it has called on the UK government to "intervene immediately" on anticipated job cuts.