OREANDA-NEWS. Tata Steel group declared its consolidated financial results for the quarter and for the financial year ended March 31, 2013.

Group performance highlights

The Indian operations recorded robust underlying performance on the back of the ramp-up of its 2.9mtpa expansion, despite weak markets.

Deliveries totalled 7.48 million tonne in the financial year 2012-13 (FY13), compared to 6.63 million tonne in the financial year 2011-12 (FY12), an increase of 12.8 percent. Q4 FY13 deliveries were 2.28 million tonne compared to 1.89 million tonne in Q3 FY13, an increase of 20.8 percent and 1.77 million tonne in Q4 FY12, an increase of 28.9 percent.

The turnover recorded for FY13 was Rs38,199 crore compared to Rs33,933 crore in FY12, a 12.6 percent increase y-o-y. Turnover in Q4 FY13 was Rs10,771 crore compared to Rs9,370 crore in Q3 FY13 and Rs9,479 crore in Q4 FY12.

EBITDA for FY13 was Rs11,698 crore compared to Rs11,559 crore in FY12. Q4 FY13 EBITDA was Rs3,714 crore compared to Rs2,525 crore in Q3 FY13 and Rs2,975 crore in Q4 FY12. profit before tax of Rs7,837 crore in FY13 compared to Rs9,857 crores in FY12.

The profit before tax for FY13, before exceptional items, was Rs8,511 crore, compared to the Rs9,346 crore of FY12. The profit before tax in Q4 FY13, before exceptional items, was Rs2,859 crore, an increase of Rs1,240 crore over Q3 FY13.

Profit before tax in Q4 FY13 was Rs2,174 crore compared to Rs1,619 crore in Q3 FY13 and Rs2,371 crore in Q4 FY12.

The European operations recorded an improvement in underlying performance on the back of increase in volumes in the quarter ended March 31, 2013.

Deliveries totalled 13.07 million tonne in FY13 compared to 14.02 million tonne in FY12, a drop of 6.8 percent largely on account of repairs and outages at the operations. However, with the relighting of the blast furnace at Port Talbot in February, there was an increase in production and deliveries in Q4 FY13. Q4 FY13 deliveries increased to 3.42 million tonne compared to 3.02 million tonne in Q3 FY13 and 3.55 million tonne in Q4 FY12.

In FY13, the turnover was Rs78,012 crore and the EBITDA was Rs764 crore compared to the turnover of Rs82,153 crore and EBITDA of Rs1,777 crore in FY12. However, the FY12 EBITDA included one-time gains of Rs1,380 crore, excluding which the underlying EBITDA for FY12 works out to Rs397 crore. In effect, the underlying EBITDA for FY13 has increased by Rs326 crore over the underlying EBITDA for FY12.

Q4 FY13 turnover was Rs19,166 crore compared to the Q3 FY13 turnover of Rs18,126 crore and Rs19,923 crore in Q4 FY12.

Q4 FY13 EBITDA was Rs613 crore compared to the Q3 FY13 EBITDA loss of Rs428 crore, an increase of Rs1,041 crore and an increase of Rs467 crore over the EBITDA in Q4 FY12 of Rs146 crore.

The South East Asian operations restructured its operations in Australia and China to turnaround its performance.

Deliveries totalled 3.11 million tonne in FY13 compared to 2.95 million tonne in FY12. Q4 FY13 deliveries were 0.8 million tonne, compared to 0.82 million tonne in Q3 FY13 and 0.73 million tonne in Q4 FY12.

FY13 turnover was Rs13,829 crore and EBITDA was Rs483 crore compared to the turnover of Rs12,710 crore and EBITDA of Rs213 crore in FY12, increase of Rs1,119 crore and Rs270 crore respectively.

Q4 FY13 turnover was Rs3,486 crore compared to the Q3 FY13 turnover of Rs3,465 crore and Rs3,152 crore in Q4 FY12.

Despite flat turnover, the Q4 FY13 EBITDA increased to Rs224 crore as compared to the Q3 FY13 EBITDA of Rs144 crore. It has also increased by Rs118 crore, over the Q4 FY12 EBITDA of Rs106 crore.

The group recorded robust performance for the quarter on the back of an increase in volumes in Q4 FY13.

The group's steel deliveries in FY13 totalled 24.13 million tonne, compared to 24.22 million tonne in FY12. Deliveries in Q4 FY13 were 6.56 million tonne versus 5.83 million tonne in Q3 FY13, an increase of 12.6 percent q-o-q and 6.22 million tonne in Q4 FY12, an increase of 5.6 percent y-o-y.

The group's consolidated turnover was Rs134,712 crore in FY13 compared to Rs132,900 crore in FY12. Q4 FY13 turnover was Rs34,650 crore, compared to Rs32,107 crore in Q3 FY13 and Rs33,999 crore in Q4 FY12.

Group EBITDA in FY13 was Rs12,654 crore compared to Rs13,533 crore in FY12. EBITDA in Q4 FY13 was Rs4,368 crore compared to Rs2,252 crore in Q3 FY13 and Rs3,419 crore in Q4 FY12.

Group profit before tax and exceptional items for FY13 was Rs3,257 crore compared to the Rs5,223 crore of FY12. For the Q4 FY13, the group profit before tax and exceptional items was Rs1,837 crore, an increase of Rs2,037 crore over the loss in Q3 FY13 and increase of Rs657 crore over Q4 FY12.

The group also monetised its portfolio by selling part of its stake in Titan Industries to realise profits of Rs962 crore in FY13.

The Eurozone crisis has pushed regional economies in Europe and UK into a recession and the current steel demand is almost 30 percent 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 cashflow expectations and the valuation of the group's European operations. Reflecting these conditions, the group took an impairment charge of Rs8,356 crore in Q4 FY13. 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 the Corus group in 2007 and partly to the assets of the business units that have been adversely affected by the severe contraction in demand, especially in the construction sector. The balance impairment relates to the assets in Tata Steel KZN in South Africa, Tata Steel Thailand and Tata Metaliks for Redi Plant.

Group profit after tax (after minority interest and share of profit of associates) for FY13 was a loss of Rs7,058 crore, compared to the profit of Rs5,390 crore in FY12, primarily due to the non-cash impairment charge of Rs8,356 crore detailed above. The group recorded a loss of Rs6,529 crore in Q4 FY13 for the same reason. This compares to the loss of Rs763 crore in Q3 FY13 and the profit of Rs433 crore in Q4 FY12.

The Tata Steel group has undertaken a series of initiatives to expand its business and deliver value to all its stakeholders.

In India, the group successfully implemented its 3mtpa brownfield expansion at Jamshedpur, which increased its total capacity to 10mtpa. Full ramp-up of the capacity was achieved in March 2013. An incremental one million tonne of steel was produced during the year, taking the total production to 7.94 million tonne. The group is now embarking on its next phase of growth and is setting up a 6mtpa greenfield steel project in Odisha. A new subsidiary, Tata Steel Odisha., has been set up specifically for this project. The project will be implemented in two phases of 3mtpa each.

In Europe, the group has invested over ?1 billion in the last three years towards improving the structural competitiveness of the business, including ?220 million in rebuilding blast furnace No 4 at Port Talbot, which was the largest industrial engineering project in the UK in the recent past. It continues to implement a series of initiatives to enhance competitiveness by cutting costs, increasing operational efficiency, improving product mix, and restructuring its asset portfolio. Tata Steel is also investing in developing and training people at the Tata Steel Academy and has taken on board around 500 apprentices in the UK in the last couple of years, of which 122 were taken on during the year. The company is working closely with the UK government on a number of key issues to improve the competitiveness of the manufacturing industry in the UK.

The group has decided that it will not proceed with its greenfield steel project in Vietnam in the near future.

During FY13, the Tata Steel group raised Rs31,799 crore of debt from various banks and financial markets taking its gross debt to Rs66,074 crore.

An amount of Rs15,472 crore was incurred on capital expenditure and Rs27,099 crore was utilised towards repayment of principal obligations.

The closing cash and cash equivalents as of March 31, 2013 was Rs10,652 crore.

The net debt was Rs55,421 crore versus Rs47,657 crore at the end of March 2012.

The Tata Steel group has also secured above Rs24,000 crore through significant financing deals in April and May 2013.

The group was able to successfully negotiate financial closure for its 6mtpa Kalinga project. Rs22,800 crore of project financing was tied up for with a consortium of 21 banks and financial institutions. This will meet the funding requirement of both the phases of the project.

In April 2013, SGD300 million was raised through a 10-year bond at a yield of 4.95 percent. This is the largest and longest dated Singapore Dollar bond transaction ever achieved for a private sector Indian company and successfully established a strong pricing benchmark in the international bond markets.

The board of directors of the company has recommended a dividend of Rs8 per equity share for the financial year ended March 2013.