The company’s bottomline took a further hit as the steel producer made an impairment provision of Rs 1,309 crore in the quarter gone by. The consolidated net profit in the March quarter stood at Rs 188 crore, down 87 per cent from same period last year.
The impairment provision made includes Rs 852 crore towards a diminution in value of investments and increased uncertainty in restarting iron ore mine in Chile, Rs 377 crore for shortfall in interest recovery and Rs 80 crore towards retirement of certain fixed assets in India, said the company in its release.
The company’s consolidated net debt/equity stood at 1.48x at the end of the quarter, while net debt/EBITDA stood at 4.50x. The company's consolidated operating EBITDA in the period under review stood at Rs 2,975 crore.
The Government of India permitted certain additional activities from 20 April 2020 in non-containment zones, subject to requisite approvals as may be required. The Company could secure the requisite approvals and has accordingly commenced operations at all facilities since the last week of April.
While the Company is making efforts to gradually ramp up capacity utilisation, the domestic demand outlook is expected to remain subdued in the near term as a vast majority of customers across automotive, construction, engineering and capital goods, etc. also will take time to resume operations and increase activity levels. Consequently, the Company initially intends to focus more on the export markets in order to improve utilization, defray fixed costs over a higher base, generate cash flows and liquidate stocks.
The company has reduced the capex for this fiscal to Rs 9,000 crore against the earlier guidance at Rs 16,340 crore due lockdown
announced impacted project activity at various sites on non-availability of required manpower and material due to restrictions on movement.
In October 2019, the Company revised down the planned capex spend for FY2020 to Rs 11,000 crore (from Rs 15,700 crore announced in May 2019). The actual cash spend for FY2020 stood at about Rs 10,200 crore, it said.
During FY20, the company also emerged as a preferred bidder for 7 more Iron Ore mines in the auctions conducted by the states of Karnataka
which saw a capex spend of about Rs 800 crore.