Extended monsoon along with a slump in auto sales in India and challenging global environment took a toll on steel consumption, as is reflected from Tata Steel’s earnings in the quarter ended December.
Tata Steel reported a loss of Rs 1,229 crore for the December quarter of FY20 compared with a profit of Rs 1,753 crore in the same quarter of the previous financial year. The company had registered a profit of Rs 3,302 crore in the second quarter of FY20.
As far as its Indian operations are concerned, the company reported that its profit for the quarter stood at Rs 1,194 crore in Q3FY20, down 47 percent YoY against Rs 2,253 crore in Q3FY19. The company’s Indian steel production stood at 4.47 million tons in 3QFY20 literally unchanged from 4.50 million tons produced in 2QFY20.
Tata Steel reported that its consolidated steel production stood at 6.99 million tonnes while deliveries grew by 12 percent QoQ to 7.31 million tonnes. However, the consolidated revenues grew 3 percent QoQ but fell 9 percent YoY to Rs 35,520 crores. At the same time, India’s revenues stood at Rs 21,299 crore, increased by 5 percent QoQ but fell 5 percent YoY.
T V Narendran, CEO and Managing Director, Tata Steel expects the steel demand in India to improve at the back of increasing government spending and a revival in the broader economy although he believes that Coronavirus poses a risk and the company is closely monitoring the fallout.
The global slowdown in economic growth due to heightened tension because of the US-China trade war and decrease in regional steel prices due to weak industrial output in key industrial areas are some of the reasons cited by the company for the weak demand.
