Tata Steel India sales, production decline in Q1

The steel majors production volume in India declined 33.5% to 2.99 million tons (MT) (provisional) in Q1 June 2020 from 4.50 MT in Q1 June 2019.

Jul 09, 2020 11:07 IST capital market

The companys sales volume in India stood at 2.92 MT (provisional) in Q1FY21, declining 26.2% from 3.96 MT in Q1FY20. Figures for Tata Steel India includes Tata Steel standalone, Tata Steel BSL (from 18 May 2018) and Tata Steel Long Products (from 09 April 2019) without eliminating inter-company transactions.

Tata Steel said in India capacity utilization of upstream facilities was adjusted to about 50% level in April while our downstream units were closed. With the phased opening of the economy, utilization levels have been ramped up gradually to around 80% level by end of June. Downstream facilities have also been restarted and are being ramped up progressively.

To counter the closure of the Indian markets in April and May, Tata Steel ramped up exports significantly by tapping new markets and improving the supply chain capability. The company further added that this will constitute around 50% of total sales volume in Q1FY21.

While April and May sales were lower, sales improved significantly in June as economic activity resumed in India. With the continued opening of the economy and the improvement in domestic demand, the proportion of domestic sales will increase from Q2, the company said.

Tata Steel Europe achieved production of 2.14 MT (provisional) in Q1FY21, declining 19% from 2.65 MT in Q1FY20. Sales volume stood at 1.94 MT (provisional) in Q1FY21, falling 14% from 2.26 MT in Q1FY20. While Europe did not impose a complete lockdown, the weak macroeconomic situation was further impacted by the COVID-19 outbreak. In line with this environment, companys production levels in Europe were ramped down to around 70% utilization. Key steel consuming sectors such as automotive and construction sector continue to be under pressure though the demand for packaging material has been robust.

The steel major said that overall Q1FY21 production and sales volumes were lower as the outbreak of COVID-19 and ensuing mobility restrictions severally impacted industrial activity and consumer sentiment across all geographies. Tata Steel said it continues to stay focused on managing costs and working capital and ensuring adequate liquidity.

Shares of Tata Steel were up 3.49% at Rs 345.85 on BSE. Tata Steel group is among the top global steel companies with an annual crude steel capacity of 34 million tonnes per annum.

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