Monday, December 11, 2023

Tata Steel overcomes Covid-19 challenge to create financial history: Chairman N Chandrasekaran

Company on course to further reduce its debt: Chairman

Mumbai/Jamshedpur, June 30: “The past 18 months have been challenging for all of us in many ways. We have seen unprecedented times due to the spread of the COVID-19 pandemic across the world and it has not yet abetted with multiple variants of the virus still a threat to human lives. In these times, it is important for us to continue to maintain Covid appropriate behaviour. As part of the efforts to combat COVID-19, Company’s #CombatCovid19 programme and direct COVID-Care support has reached the lives of over 1 million beneficiaries,” said N. Chandrasekaran, Chairman, Tata Steel while addressing the shareholders at the 114th Annual General Meeting of Tata Steel Limited held virtually on Wednesday, June 30.

In his address Chandrasekaran stated that the first wave of the pandemic brought economic activity to a near-standstill in almost all major economies during the first half of Financial Year 2020-21 and global growth declined by 3.5% in 2020. In India too, the GDP declined by 7.7% year-on-year.

As a result of the pandemic, the Indian steel industry has also suffered production losses due to the National lockdown especially in the first two quarters of the financial year but recovered gradually in the third and fourth quarter driven by strong revival in the domestic steel demand and rebound in manufacturing and infrastructure development activity in India.

Under this backdrop, Company too had a very challenging first quarter. However, with the efforts and commitment demonstrated by the employees, the Company not only overcame the crisis but also produced the best underlying financial performance in its history.

For the Financial Year 2020-21, the consolidated revenues increased by 5% to ₹1,56,294 crore, and on the back of a very strong operating performance of its Indian business, achieved its highest ever EBITDA of ₹30,892 crore, which is a growth of 71% year-on-year. The consolidated profit after tax also increased to ₹8,190 crore. The management of your Company demonstrated strong focus on generating free cash flows through tight working capital management and disciplined capital allocation during the year to record its highest-ever free cash flows of ₹23,748 crore. The turnover from Indian operations of Tata Steel stood at ₹91,037 crore which is ~11% higher than the previous year in spite of being impacted severely in the first half of the year due to the pandemic and generated EBITDA of ₹28,587 crore for the year, which is 62% increase over the previous year. On a standalone basis, the revenue of Tata Steel was at ₹64,869 crore which was 7% higher than the previous year while the EBITDA of ₹21,952 crore was 45% higher than the previous year.

Let me now spend a few minutes on the broad areas of focus of the Company. Over the last 4 years, the management of your Company has continued to focus on building the scale of the Indian business. In addition to the organic growth plan of expanding the Kalinganagar facilities to 8 million tons per annum which is currently underway, the Company acquired Bhushan Steel in May 2018 and the steel business of Usha Martin in 2019 to strengthen Tata Steel’s overall portfolio. Both these acquisitions have been integrated efficiently in a short period of time and have also yielded significant synergies.

As we grow in scale, it is also imperative to continue on the path of simplification of the business and I am happy to report that your Company has rationalised around 100 legal entities in the last 24 months. We have also advanced the process of the merger of Tata Steel BSL with Tata Steel which will also yield further synergies for the Company in the future. We are also progressing well on the re-organisation and consolidation of the India business of Tata Steel into four clusters viz.

As a result of all the actions taken by the Company during the year, aided by the strong market conditions, we have significantly strengthened the financial position and reduced the net debt by ₹29,390 crore and our consolidated net debt at year end was at ₹75,389 crore, which is 28% lower than the start of the year. As we end the first quarter of the Financial Year 2021-22, I am happy to report that your Company is well on course to further reduce its net debt position to have a strong Balance Sheet in the current financial year.

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