InvestorQ : Why did Tata Steel dip into such a huge loss in the Jun-20 quarter?
diksha shah made post

Why did Tata Steel dip into such a huge loss in the Jun-20 quarter?

Answer
user profile image
2 months ago


Steel companies have been under pressure due to weak demand locally and that has taken its toll on their numbers. In addition, their profits have also been hit by cheaper steel coming in from other countries like Japan, China, Korea and Russia.

Tata Steel reported net loss of Rs.4648 crore for Jun-20 quarter. This is in sharp contrast to the net profit of Rs.714 crore that it reported in the Jun-19 quarter. Even the top line revenues fell by almost one-third to Rs.24,481 crore due to pandemic related fall in sales.

Tata Steel also managed to reduce its overall operating expenses by about 20% during the quarter in tune with lower revenues and has also been striving for lower leverage costs. Tata Steel had already been under pressure due to weak domestic demand

Clearly, the nationwide shutdown has taken its toll on Tata Steel. The good news is that the exports to China have been extremely buoyant in the last 2 months on higher order flows. However, that is still a very small part of the total revenues of Tata Steel.