Delay in Bhushan Steel acquisition may lead to governance issues

Tata Steel top gainer gains 4% on NCLT approval for Bhushan Steel bid

Tata Steel top gainer gains 4% on NCLT approval for Bhushan Steel bid

Meanwhile, the company reported a net profit of Rs 14,688 crore as against a loss of Rs 1,168 crore the corresponding quarter a year ago. The fall in production was due to technical snag led shutdown of a blast furnace at Kalinganagar plant.

EBITDA for the quarter improved to Rs 4,823 crore, up by 11.5 per cent year-on-year (y-o-y) as the decline in deliveries was more than offset by improved realisations. The issue has been resolved and the plant is now running at full capacity, said managing director T V Narendran.

Tata Steel is looking at a capex of around Rs 8,000 crore for the current fiscal, the company's Executive Director & CFO Koushik Chatterjee said. "The company also achieved highest ever quarterly sales volume of 4.22 million tonnes aided by robust domestic demand".

Tata Steel Europe is seeking buyers for its five non-core business units that supply products to niche markets.

The company also expressed concern over the delay in the entire process as already 270 days have passed for the resolution process, after which, according to IBC rules, the asset has to be liquidated. "The 50:50 JV discussion with thyssenkrupp is progressing well and we are committed towards building a strong European portfolio", Narendran said.

The total expenses stood at Rs 32,626.42 crore during the quarter as against Rs 31,132.02 crore in the year-ago period.

"Kalinganagar Phase 2 expansion is progressing well, which will take our capacity from 13 million tonnes (mt) to 18 mt of crude steel".

"On the steel outlook, we are closely watching the developments in global steel trade because of USA protectionist measures".

Koushik Chatterjee, executive director and chief financial officer, Tata Steel, said the possibility of delisting the stressed asset can not be ruled out. "We maintain "BUY/SO" with TP of Rs 903, implying an exit multiple of 7.0x FY20E EBITDA", said Edelweiss Securities in a research note. Our $1.3 billion worldwide bond issue in January 2018 helped us extend our maturity profile.

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