Tata Group's Steel arm, Tata Steel, the world's sixth-largest steelmaker by capacity, suffered a net loss of Rs 2,209 crore for the first quarter of current financial year, ended June 30, against a profit of Rs 3,901 crore in the same period last year. The loss during the period is led by decline in steel demand in the recession hits markets of US and Europe, due to reduced construction activities under the impact of global slowdown.

The termination of a steel off-take agreement at a key European plant, decline in steel prices and rise in imported coal prices, also affected the company's business in the reporting period. Tata Steel's consolidated turnover, including revenue from Corpus in UK, has been reported at Rs 23,292 crore in June quarter, as compared to Rs 43,496 crore registered in the same period last year.

Rata Tata, the Chairman of Tata Group, said the company will rationalize its operations in Europe, bringing cost effectiveness to mitigate the adverse impact of global slowdown.

Tata Steel MD, B Muthuraman said: "The group is currently undertaking several restructuring initiatives internally to not only weather the current storm, but to emerge much stronger in the near future."

The financial results also affected the company's stocks, which declined 5.14% to close at Rs 436.40 on the Bombay Stock Exchange on Tuesday.