I. Overview
The objective of this report is to convey the Managements perspective on the external environment and steel industry, as well as strategy, operating and financial performance, material developments in human resources and industrial relations, risks and opportunities and internal control systems and their adequacy in the Company during Financial Year 2023-24. This should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in the Integrated Report and Annual Accounts 2023-24. The Companys financial statements have been prepared in accordance with Indian Accounting Standards (‘Ind AS) complying with the requirements of the Companies Act, 2013, as amended and regulations issued by the Securities and Exchange Board of India (‘SEBI) from time to time.
II. External Environment
1. Global Economy
The global economy continues to show resilience despite facing several strong headwinds viz., the Middle East crisis, Russias invasion of Ukraine, high inflation, high costs and falling household purchasing power, rising geopolitical uncertainties, and forced monetary tightening. Global growth is estimated to sustain at 3.2% in 2024, similar to 2023. The economy is better placed now than at the same time in 2023, with the risk of a global recession receding. In late 2023, headline inflation neared its pre-pandemic level in most economies for the first time since the start of the global inflation surge. As global inflation descended from its peak, economic activity grew steadily, defying warnings of stagfiation and global recession. The United States with some middle-income economies displayed strong economic performance, with aggregate demand supported by stronger than expected private consumption amidst still tight though easing labour markets. Continuing geopolitical tensions, including the Middle East crisis, Russia-Ukraine war and the upcoming US presidential elections pose a risk to dampen growth in 2024.
Growth in the United States is expected to be 2.4% in 2024, while the Eurozone is expected to witness a minor recovery of 0.7%. Recovery in Europe will be driven by declining inflation and energy prices normalising. China witnessed stronger-than-expected growth of 5.2% in 2023, with 2024 growth projected at 4.65%. Industrial overcapacity, continued slowdown in domestic demand, deepening deflation and heightened trade tensions with the West will remain major headwinds for China throughout 2024.
Economic Outlook
The baseline forecast is for the world economy to continue growing at 3.2% during 2024 and 2025, at the same pace as in 2023. A slight acceleration for advanced economies where growth is expected to rise from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025 will be offset by a modest slowdown in emerging market and developing economies from 4.3% in 2023 to 4.2% in both 2024 and 2025.
Global inflation is forecast to decline steadily, from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies. Core inflation is generally projected to decline more gradually. Energy prices are expected to rationalise in 2024. Coal and natural gas prices are expected to continue declining from their earlier peaks with the gas market becoming increasingly balanced on account of new supply, dampened demand, and high storage levels. The forecast for non-fuel commodity prices is expected to be broadly stable in 2024, with prices for base metals expected to fall on account of weaker industrial activity in Europe and China.
With inflation projected to reduce in this year, policy rates of central banks in major advanced economies are expected to start declining in the second half of 2024. Governments are expected to tighten fiscal policy in 2024 and, to a lesser extent, in FY2025–26. Among major advanced economies, the structural fiscal balance to GDP ratio is expected to rise in the United States and in the euro area in 2024. In emerging market and developing economies, the projected fiscal stance is expected to be, on average, broadly neutral in 2024, with a tightening projected for 2025.
Advanced economies are expected to see incremental growth, largely reflecting a recovery in the euro area from low growth in 2023. Developing economies are expected to experience stable growth through 2024 and 2025, with regional differences.
China is expected to witness its slowest growth since the mid-90s, outside of the pandemic years. Property sector will continue to remain weak with falling demand and developers lacking finances to complete projects. Trade growth is also expected to remain low due to subdued global demand. There remains a possibility that the Middle East conflict escalates which could have far reaching impact, including rise in oil prices and shipping challenges especially for containerships through the Red Sea.
2. Indian Economy
Indias economic growth has been resilient against global headwinds for three fiscal years now. Policy and regulatory support and prudence have helped, as has the gradual reinvigoration of the private sector.
The Countrys attractiveness as an investment destination remains robust, given the size and scale of operations it has to offer to global companies, abundant skilled talent pool, and prowess in technology and innovation. The industrial manufacturing sector has experienced a significant boost, attracting global technology giants to expand their supplier networks within India. This momentum is further supported by the implementation of state industrial policies that complement sector specific incentive schemes. Concurrently, substantial investments in logistics and infrastructure development, including the construction of new roads, highways, and rail tracks, underscore the Governments commitment to bolstering this critical sector. Capital spending by the Government and strong manufacturing activity have meaningfully contributed to the robust growth outcomes in 2023.
Various Production Linked Incentive (‘PLI) schemes have revived the manufacturing sector post pandemic. They are helping build up critical value chains and industrial clusters, besides expanding the Countrys export basket. Overall, the PLI schemes have brought in a new regulatory framework, which can be aligned to address industrial and manufacturing technology de_ciencies and improve output. The Government is also contemplating extending the scheme to further sectors, to develop new segments in labour intensive sectors. Services export grew on a year-on-year basis on the back of rising exports of software, business and travel services. The rise in net services exports receipts and softening of the global commodity prices, more than compensated for a slight rise in merchandise trade deficit. This has helped cushion the Current Account Deficit (‘CAD).
Indias retail inflation for FY2023-24 has seen a significant downturn, marking its lowest point since the onset of the COVID-19 pandemic. Re_ecting this trend, the Reserve Bank of Indias Monetary Policy Committee (‘MPC) in its recent meeting, decided to maintain policy rates at their current levels, citing the ongoing reduction in price pressures across the country.
3. Global Steel Industry
Steel industry has been impacted by high inflation and interest rate environment in addition to growing geo-economic fragmentation. The slowdown of steel consuming sectors, especially in EU & US continued in 2023 as investment and consumption weakened. The delayed effect of tightening monetary policy may allow slow recovery in 2024 in advanced economies while emerging economies, particularly Asia may grow faster. Persistent core inflation, high oil prices and tight job market remain the downside risks to stabilising inflation. As Tata Steel approaches the end of this monetary tightening cycle, tighter credit conditions and higher costs have led to a sharp slowdown in housing activity in most major markets and have hampered manufacturing sector globally. While it seems the world economy will experience a soft landing from this monetary tightening cycle, global steel demand growth is expected to remain weak and market volatility remaining high on lagged impact of monetary tightening, high costs and high geopolitical uncertainties. While residential construction has been impacted by high interest rates, infrastructure investments have cushioned the impact in many regions, including advanced economies. Manufacturing and consumer durables sectors continued to slow against weak demand. While automotive recovery continued in 2023, its expected to decelerate in 2024.
Chinese economy is in a structural transition phase. The property sector turmoil impacted domestic steel demand through most of 2023, albeit the position improved slightly in the later half of the year largely on account of Government interventions. 2023 witnessed a growth of ~9% in steel exports from China leading to softening prices in the international market and lowering profitability of mills in emerging markets. Steel demand in China in 2024 is expected to remain around the level of 2023, as real estate investments continue to decline, but the corresponding steel demand loss will be offset by growth in steel demand coming from infrastructure investments and manufacturing sectors.
European Union (EU) and United Kingdom (UK) are deemed to be facing the biggest challenges with geopolitical shifts, high inflation monetary tightening and partial withdrawal of fiscal support, and still high energy and commodity prices. While EU demonstrated resilience through the recent energy crisis, high interest rates and energy costs continue to impact manufacturing. The downside factors pulled the demand in 2023 to lowest since 2000. The demand in 2024 is expected to be just over the pandemic levels.
Demand Outlook
Global Steel demand is expected to grow by ~2% to reach 1,793 MT in 2024. Chinese domestic demand will continue to be impacted by property sector woes, however, Government impetus may improve infrastructure investment in later part of 2024 and domestic demand is expected to sustain 2023 level. Exports are expected to continue to be at 2023 levels. Consolidation in the sector may improve profitability of Chinese mills in the long run but squeeze margins during investment phase. In 2024, Chinese steel demand is expected to sustain at 2023 level. However, it is likely to decline in the medium-term, as China gradually moves away from a real estate and infrastructure investment dependent economic development model.
The developed world is also expected to show a strengthening recovery with 1.3% in 2024 and 2.7% in 2025, as it is expected to see steel demand finally show a meaningful uptick in the EU in 2025 and continued resilience in the US, Japan, and Korea.
Emerging regions like Middle East and North Africa (‘MENA) and Association of Southeast Asian Nation (‘ASEAN) are expected to show accelerating growth in their steel demand over 2024-2025 after a significant slowdown over 2022-2023. Political instability and erosion of competitiveness may lead to a lower trend steel demand growth going ahead.
India has emerged as the strongest driver of steel demand growth since 2021. The growth is backed by a booming construction sector with private consumption as well as robust Government expenditure fuelling infrastructure and capital goods as well. Automotive also performed better than expected while consumer durables industry underperformed in the inflationary environment. Coking coal prices softened towards the end of the financial year and imports from China squeezed margins for domestic players while pulling down international steel prices. The growth projection for Indias GDP in the FY2024-25 is expected to be 6.8% reflecting both global and domestic optimism in the Countrys economy on the back of robust manufacturing activity and infrastructure spending. India is expected to retain its tag of the fastest growing large economy.
While private industrial capital spending in India has been slow, it is expected to pick up with ongoing supply chain diversification benefits and investors response to the Governments PLI scheme to boost key manufacturing industries. Additionally, rising capacity utilisation, robust credit growth and upbeat business sentiment point to an improving outlook for private investment.
The Reserve Bank of India is expected to keep interest rates constant in the near term, while restrained public consumption spending is expected to be offset by strong public investment expenditures.
For the next fiscal, inflation is expected to decline further on an average amid risks to food inflation. Soft commodity prices and healthier farm output should help moderate inflation. However, geopolitical disruption in the Middle East could add some pressure on inflation. Softer crude oil prices and moderation in domestic growth is expected to keep trade deficit in check despite tepid export of goods. Alongside, robust services trade surplus and healthy remittances is expected to keep the CAD in check which coupled with healthy foreign portfolio flows amid a favourable domestic macro environment would support the Indian Rupee.
Steel demand in India is expected to grow at ~8% in 2024 to reach 144 million tonnes. Interim budget has signaled strong demand with 11% increase in infrastructure budget. Steel demand growth is expected to continue, albeit slightly subdued in the first half of the year due to slowdown of construction during general elections. Prices are expected to remain soft in light of cheaper Chinese imports in absence of policy intervention. Integrated steel plants are expected to continue capacity additions, although at a slower pace than announced given tough operating environment. With capacity additions planned in FY2024-25, industry leverage is expected to increase significantly.
Utilisation levels are expected to remain healthy at close to 80%. Net export position is expected to strengthen with improving global demand.
4. Global Raw Material Market
The steel raw materials market in FY2023-24 exhibited ongoing volatility, notably within coal markets due to intermittent weather disruptions in Eastern Australia and unforeseen interruptions in logistics and production.
Demand & Supply
Total global crude steel production for 2023 amounted to 1.85 billion tonnes down slightly by 0.1% year-on-year, with growth in India, along with other Asian countries offsetting the production loss in European market. Crude steel production in China, the worlds largest steel producing country, has been firm at 1.02Bt in 2023, fiat y-o-y, leading to strong demand for iron ore and met coal. India had seen a remarkable increase in steel production, with total crude steel production rising 11.8% y-o-y to 140.2Mt, but the steel production in EU fell to 7.4% y-o-y in 2023 to 126.3Mt due to beleaguered steel demand. Chinese iron ore imports in 2023 rose 6.6% y-o-y to 1.18Bt, owning to stronger-than expected demand amid a lack of Government mandated steel output restrictions and higher steel exports. Similarly, coking coal imports to China also surged 60.6% year-on-year to 101.9Mt due to healthy demand, rising volumes from Mongolia and competitive prices for Russian coals.
On top of sharp rise in coking coal imports, China also ramped up domestic coal production, with its raw coal production hitting a record high in 2023, at 4.66Bt, up 2.9% y-o-y. Australian coal exports to China also resumed gradually in 2023 following the lifting of uno_cial bans, but volumes were substantially lower at 2.8Mt, compared to 35.4Mt in 2020.
Meanwhile, Australian coking coal exports declined for the fourth consecutive year, dropping by 5.0% y-o-y to 150.6Mt, in line with lower mine utilisation rate observed across major Australian PHCC producers. Logistics and mining operations were adversely affected by heavy rainfall and occasional _ooding in Eastern Australian, while unplanned maintenance and production also disrupted coal production and delivery.
Prices
Seaborne Iron ore prices in 2023 had been largely fiat y-o-y, in line with relatively fiat crude steel production. 62% Fe CFR China prices ranged between $97.35/t and $141.45/t in 2023 compared to $80.15/t and $162.75/t in 2022. Average iron ore prices stood at ~$119.75/t for the year, fiat from $120.16/t for 2022.
Iron ore prices saw intermittent support in the year as the Chinese governments stimulus buoyed sentiments and prices.
Negative steel margins reported by Chinese mills have however, limited further upside to iron ore prices despite firm demand from end-users. At the same time, key property metrics in China, such as new home sales and starts, also remained lagged in 2023, which weighed on steel demand and prices.
On the supply front, total shipments from Australia and Brazil remained healthy, at an average of 25.1Mt/week in 2023. However, uncertainty surrounding Chinas downstream steel recovery and potential resilient performance in steel exports could impact seaborne iron ore demand in 2023.
Seaborne Coking coal prices remained elevated due to adverse weather conditions alongside the production disruptions faced by major suppliers. Prime Hard Coking Coal (‘PHCC) Free on Board (‘FOB) Australian prices ranged between $221.5/t and $390.0/t in 2023, compared between $188/t and $670.5/t in 2022. Average coking coal prices stood at $296.3/t for the year, down from $363.7/t the year prior.
FOB Australian prices in 2023 have eased from last year amid rebalancing of trade flows. However, prices were still elevated on a historical basis as wet weather condition and unforeseen production disruptions led to decline in production volumes.
Into 2024, coking coal prices are expected to trade within a tighter range, although volatility may persist due to weather developments, particularly in Eastern Australia.
Demand might arise from the expansion of crude steel production and coke making capacity in India and South East Asia, but re-established trade flows together with robust domestic production in China may further balance the market.
Initiatives by Tata Steel
? New coal trials: Tata Steel continues to explore new coal grades to achieve competitive and diverse sourcing from different countries. Out of few coals tried out in Tata Steel plants in FY2023-24, 7 new coals have been included in the sourcing plan for FY2024-25.
? Blend optimisation to take advantage of market opportunities: Initiatives undertaken towards leaning of blend through usage of additives, weaker coals, value in use accretive coals in blend for each basket, to partly offset the increase coal prices. ? Price Prediction Models: As part of digital initiatives, Tata Steel has developed an in-house price prediction model for forecasting of coking coal prices. This is one of the levers being used, along with market & competitive intelligence, to source better.
? Supplier Engagement: Tata Steel has been strengthening metcoal supplier connect through organised meets in Australia, longer term contracts, and other value in use initiatives.
? Domestic Sourcing: Long-term contract agreement has been entered with Coal India Limited to reduce import dependency of thermal coal for power generation and operations as well as enhancing security of supplies from mines in proximity.
III. Strategy
During the year under review, in line with its aspiration of becoming the most respected and valuable steel company globally, the Company has continued to focus on growth through the organic route in its India operations while upgrading of the assets in Europe. Furthermore, the Company has been successful in keeping its investment grade credit rating. With the merger of five companies into and with Tata Steel, the portfolio is being simpli_ed to derive synergies.
The Company continues to be committed to achieving its plan for growth until 2030. The following will assist in accomplishing the Companys objectives:
Market Leadership in India
The demand for steel in India is being driven by structural factors like growing infrastructure investment, rapid urbanisation, the push towards domestic manufacture, and rising a_ordability. Growth in demand combined with substantial raw material reserves and an extensive pool of competent manpower provide structural advantages for the steel sector. Tata Steel intends to take advantage of this potential for growth by expanding organically. The Company is on track to double its production capacity in India. The acquisition of NINLs steel production facility enhanced the Companys long products product basket thereby balancing the portfolio between long and fiat products. The Company has made good progress in the execution of TSK phase 2 capacity expansion project in FY2023–24 which will enable the necessary volumes and grades of steel to suit growing and evolving customer needs.
The initiatives aimed to increase the Companys captive raw material mining are proceeding as planned. Tata Steel is further enhancing its efforts of digital adoption, understanding how consumers are changing, and creating an organisation-wide culture of customer obsession.
Consolidate position as global cost leader
Raw material prices as well as steel prices continue to be volatile under the influence of supply chain disruption emanating from geopolitical uncertainties and increased China export outlook. The Company aspires to achieve benchmark operating KPIs through process improvements and savings through structured initiatives like Shikhar25.
Tata Steel is also working parallelly on structural cost reduction by strengthening the logistics network, expansion of raw material portfolio, reduction of fixed costs, among others. The Company will keep leveraging technology and digital solutions to achieve and sustain benchmark cost performance.
Attain leadership position in adjacent businesses
Technology, innovation, and customer expectations are developing at an unprecedented rate, generating possibilities for expansion of businesses that serve the steel sector. Tata Steel is creating a new paradigm for the future by blending alternative thinking and the ability to visualise opportunities. The strategy is to stand out by having a thorough grasp of the demands of the client, providing relevant technology-based solutions, and fostering the development of significant talents within the ecosystem of client needs, pertinent technology-based problem solving, and the ecosystems development of relevant capabilities. The following are adjacent businesses where the Company aspires to attain leadership positions:
1) Services & Solutions: This business was launched with the objective of deepening of understanding end-consumers and customer decision journey. The Company has diversified its Services & Solutions portfolio to include reinforcement solutions, fencing & binding solutions, structural solutions, doors & windows and modular housing.
2) New Materials Business: The Company strives to grow its non-steel materials division to serve specialised solutions to customers. Tata Steel is currently focusing on materials like composites, fibre-reinforced polymers, graphene, and medical materials.
Leadership in sustainability
Tata Steel continues to work towards its aspiration of achieving Net Zero by 2045. Tata Steel is exploring low technology readiness level initiatives in the areas of carbon emission reduction in ironmaking, steelmaking and other parts of the value chain. The Company continues to focus on key enablers like specific freshwater consumption, circularity principles, specific dust emissions, Biodiversity and Renewable energy. The Company has taken aspirational targets in each of these areas. The use of technology and innovation in existing processes and business models will be critical to achieving the targets.
Strategic enablers
The Company has identified four strategic enablers for achieving the above strategic objectives, which are as follows: Best places to work for in Manufacturing in India - Tata Steel is utilising process intervention and technology for creation of best-in-class infrastructure, future ready policies, and ensuring a safe and healthy work environment for all employees. To create a safe and healthy environment for all employees, the Company is focusing on reducing unsafe incidents at the workplace through process and technology interventions. Connected platforms with analytics and system generated insights and alerts play a pivotal role in our safety journey.
Becoming the digital leader in steel industry globally – Digital has significant potential of creating and unlocking value in existing processes. Tata Steel has adopted a 7 layer technology architecture based on Industry 4.0 principles which has helped the Company make significant progress on its digital and analytics journey and has three World Economic Forum Industry 4.0 lighthouse sites.
Top 5 in technology in steel industry globally - Technology led differentiation has been one of the cornerstones for Tata Steel in bringing value to the customers. While technology will play a pivotal role in its sustainability journey, it will have equal importance in enabling Tata Steel to become future ready for evolving nature of demand from both existing and new market segments. Fostering a culture which make Tata Steel future ready - While TQM and continuous improvement, safety, ethics, environmental sensitivity, and community engagement are the foundation of the Companys philosophy, Tata Steel is also working on fostering newer facets of culture like agility, innovation and deepening strategic orientation in the organisation.
IV. Human Resource Management and Industrial Relations
In the dynamic landscape of Tata Steels operations during FY2023-24, the focus on human capital continued to be a cornerstone of the Companys strategic endeavours. Recognising the pivotal role of our workforce as the driving force behind our diverse business ventures, the Company endeavoured to cultivate an environment conducive to their growth, development, and overall well-being. At the heart of which, lies a commitment to cultivate an environment to unleash the collective possibilities of the Companys employees, thereby enabling excellence at all touchpoints.
Employee Capability Development and Technological Prowess
Capability building remains a key tenant to empower the Companys employees to lead Tata Steel towards technology leadership. In this direction in FY2023-24, the Company has started 12 new Schools of Excellence for developing critical and new age capabilities such as Energy Management, Water Management, Data Governance and Management, Coating and Direct Reduced Iron, Hydrogen Utilisation, Carbon Capturing Utilisation and Storage and Project and Construction management. Currently, there are 55 Schools of Excellence running, which are structured programs focussed on developing capabilities on specific subjects that enable participants to learn from industry experts and apply the learning in their work which helps create subject matter experts necessary to enable organisations growth. The Company has also curated EdNxt, our Learning Experience Platform, which is an Artificial Intelligence driven, learner friendly single window providing all the learning content as per employees need at their _ngertip. The Company is collaborating with several academic institutes such as IIT Kharagpur, IIT Roorkee, NICMAR, NIT Trichy and Industry Experts, to further its technological expertise. With the objective to execute excellence at all touchpoints, the Companys capability building efforts continue to enable our vendor employees. So far, the Company trained more than 1,00,000 vendor employees through Jamsetji Nusserwanji Tata Vocational Training Institute (‘JNTVTI) and upskilled 2,200 vendor employees working in high-risk jobs. The recognition of Tata Steel as the winner of the ‘Golden Peacock National Training Award for 2024 is a testament to Tata Steels dedication to nurturing talent.
Collaborative Employee-Management Relations
To empower the Companys employees through a working together philosophy between employees and management, the Company has crafted and implemented a two-tier joint consultative structure at the Kalinganagar facility, symbolising our collaborative spirit following the formation and recognition of a new union. Some of the important employee related subjects being addressed through the joint consultation mechanism are community welfare, suggestion management, employee training and development and diversity and inclusion. Through this the employees are empowered to capture their evolving needs and collaboratively create interventions to address them, strengthening their sense of belonging with the organisation.
Diversity, Equity, and Inclusion
For Tata Steel, it has never been just about embracing differences, its about recognising and tapping into the myriad of possibilities to drive innovation and excellence. The Companys relentless pursuit for creating a vibrant organisation through Diversity, Equity, and Inclusion is evident in our ground-breaking initiatives. With the recruitment of over 1,100 diverse employees in a single year, including the pioneering batch of female fire_ghter trainees, the Company is setting industry benchmark under the ‘Flames of Change initiative. Tata Steels advocacy for inclusive work shifts has borne fruit in Odisha, and the Company is committed to extending this success to Jharkhand through continued advocacy for legislative change with the Jharkhand Government and the Central Government for permitting female employees to work in three shift operations. The overwhelming response to ‘Ananta Quest, an industry first initiative to integrate persons with disability into the manufacturing sector underscores the Companys unwavering commitment to foster a workplace where every individual feels valued, respected, and empowered to contribute their fullest potential.
Employee Well-being
As a cornerstone of the organisational philosophy, the Company upholds the paramount importance of fostering comprehensive employee well-being, recognising it as indispensable for cultivating a thriving and resilient workforce. Central to the ethos, the Company introduced the ‘Wellness for Life platform which marks a significant step in the Companys journey to achieve exemplary standards in employee well-being and is designed to act as a springboard for our employees, providing access to resources and tools that will support them in their physical, mental, occupational, financial, and social well-being.
The Companys focus on employee well-being extends to its vendor employees, and the Company is committed to the care and financial security of this significant segment of the workforce. In a one of its kind initiative, the Company collaborated with the Government agencies to enable the Companys vendor partners for enrolling the vendor employees in welfare schemes such as Pradhan Mantri Suraksha Bima Yojana and Pradhan Mantri Jeevan Jyoti Yojana. This expands the sphere of financial security for them and their families. In acknowledgement of the contributions made by the vendor employees resulting in organisations exceptional performance, an ex-gratia reward has been given to them for their partnership towards organisations growth.
Empowering Performance and Growth
The Company continues to align the needs of the employees with organisational goals to enable employee performance and nurture their aspirations. Initiatives such as Sub-Banding, Accelerated Career Enhancement Scheme and Uniform Organisation Structure provide career growth opportunities to the white-collar and blue-collar employees while also driving focus on performance and productivity.
Strategic role realignment through identified subsidiaries has also been a key enabler for improving productivity. All these efforts have contributed towards achieving an all-time high employee productivity of 900 tonnes of crude steel per employee per year.
Organisational Integration and Harmony
The undeniable strength of synergy in uniting disparate elements ampli_es the collective impact and propels the Company towards shared success. A significant milestone in this journey was the seamless integration of five Tata Steel Group Companies into Tata Steel Limited, demonstrating our ability to maintain industrial harmony while unlocking synergies and creating opportunities for talent development. The Company leveraged the ‘fit for purpose operating model, which was driven by identified top-level leaders. Process agility was ensured by centralising or decentralising functions to maximise synergies. Grades and designations were harmonised, and structural parity was ensured. Systems and processes were transitioned and integrated seamlessly. The assimilation was executed with precision, ensuring seamless integration and alignment with organisational goals, resulting in a cohesive and efficient operating framework. Through meticulously curated cultural assimilation programs, the Company facilitated a smooth transition, fostering a sense of belonging and collaboration among our expanded workforces.
Recognition
Being acknowledged as a Great Place To Work Certification™ for the seventh consecutive year reafirms the Companys dedication to an employee-centric approach, inspiring us to continue nurturing a culture where talent thrives with the aim to help Tata Steel realise its growth ambitions. Tata Steels steadfast commitment to excellence bore fruit in the form of prestigious accolades, including being recognised as the Gold Employer by the Indian Workplace Equity Index and a top employer brand by Randstad Employer Brand Research. These accolades serve as a testament to the Companys standing as an employer of choice.
As the Company looks ahead, it remains determined in its dedication to fostering a workplace where every individual is empowered to unleash their fullest potential, and where the Companys collective efforts pave the way for a brighter, more inclusive, and prosperous future.
V. Tata Steel Group Operations
1. Major Highlights
During the year under review, the consolidated crude steel production for Tata Steel Group (‘TSG) was 29.94 MT which was lower by 2% (FY2022-23: 30.65 MT), primarily on account of the reline of Blast Furnace 6 in the Tata Steel Netherlands, which was offset by an increase in production at Indian operations owing to de-bottlenecking across sites and higher steel production at Neelachal Ispat Nigam Limited (‘NINL) during the year. The production increased at Tata Steel Standalone to 20.12 MT which was higher by 2% (FY2022-23: 19.67 MT) attributable to de-bottlenecking across sites. NINL produced 0.66 MT (FY2022-23: 0.20 MT), as it started production from October 2022 onwards post takeover of its operations by the management of Tata Steel.
The European Operations produced 7.80 MT, lower by 17% (FY2022-23: 9.35 MT) due to the reline of Blast Furnace 6 in the Tata Steel Netherlands along with subdued market demand. Production at South East Asia (‘SEA) of 1.36 MT (FY2022-23: 1.43 MT) was lower due to weak demand.
The consolidated steel deliveries of TSG was at 29.39 MT in FY2023-24 increase of 2% (FY2022-23: 28.79 MT), primarily at Tata Steel Standalone (1.06 MT). Deliveries declined at Europe on account of the reline of Blast Furnace 6 in the Netherlands.
The turnover of TSG in FY2023-24 was lower over FY2022-23 by H14,182 crore (6%) on account of decline in steel realisations across geographies along with decline in deliveries at the European operations attributable to decrease in demand and lower production, partly offset by higher deliveries in India.
The EBITDA in FY2023-24 was lower over FY2022-23 by H9,296 crore (28%), primarily due to subdued performance from the European operations primarily due to contraction in steel prices and lower deliveries. EBITDA however, improved in the Indian operations on account of higher deliveries by 1.06 MT along with decrease in input costs, which was partly offset by lower steel realisations.
Tata Steel Group (‘TSG) on a consolidated basis reported a loss after tax of H4,910 crore as compared to profit after tax of H8,075 crore in FY2022-23 primarily on account on account of higher charges under exceptional items of H7,814 crore as against a credit of H113 crore in the previous year majorly due to the impairment of Property Plant and Equipment at TSUK for heavy-end restructuring along with provision for redundancy and restructuring costs. The decline in profit was also due to lower EBITDA attributable to subdued operational performance of European operations.
2. Tata Steel Limited (Standalone) a) Operational Review
| (mn tonnes) | |||
| FY24 | FY23 | Change (%) | |
| Hot Metal | 19.94 | 19.85 | 0 |
| Crude Steel | 20.12 | 19.67 | 2 |
| Saleable Steel | 19.77 | 18.90 | 5 |
| Sales | 19.91 | 18.85 | 6 |
The saleable steel production and sales trend over the years is as follows:
Production and Sales of Steel Division
Note: *Production and sales from FY21 onwards include TSM post-merger.
#Production and sales from FY23 onwards include TSG post-merger.
The combined saleable steel production of FY2023-24 stood at 19.77 MT which was higher than that of FY2022-23 (18.90 MT) by 5% attributable to de-bottlenecking across sites. The combined steel sales of FY2023-24 stood at 19.91 MT, higher by 6% over FY2022-23 (18.85 MT), primarily on account of higher production across sites and higher traded volumes.
Plant-Wise Review i) Tata Steel Jamshedpur
Tata Steel Jamshedpur Works (‘TSJ) is Tata Steels flagship plant and is among the first steel plants in Asia and the only site in India to produce steel at the same site continuously for over 100 years. It has a capacity of 11 MTPA.
Year in review
? Achieved best ever crude steel production during FY2023-24.
? Achieved best ever Hot Rolled Coil production during FY2023-24.
? Increase in scrap charge contributing positively towards reducing carbon footprint.
? 100% iron ore requirements met through captive mines.
? Linz-Donawitz (‘LD3) and Thin Slab Casting and Rolling (‘TSCR) become the first shop in India to successfully cast and hot roll High Silicon Grain oriented electrical steel.
? Developed air cooled rebars of 7mm and 9mm which is first-of-its-kind in India for Smartfab application. ? Successfully rolled high strength Fe 550SD and Fe 550D TMT bars with lean chemistry.
Awards and Recognitions
? CRC West received awards from National Safety Council Maharashtra Chapter in Heavy Engineering category for the longest accident-free period and lowest accident frequency rate.
? LD3 and TSCR projects awarded at 7th National Energy Efficiency Circle Competition held at Chandigarh. ii) Tata Steel Kalinganagar
Tata Steels Kalinganagar (‘TSK) plant is one of the worlds most advanced factories, recognised by the World Economic Forum as a ‘manufacturing lighthouse. Commissioned in 2016, Kalinganagar plant attained production levels at its rated capacity of 3 MTPA (Phase I) in less than two years. The plant is dedicated to manufacture Flat Product steel.
Year in review
? 100% iron ore requirements met through captive mines.
? Achieved best production volumes and operating KPIs with almost all operating units achieving their best ever annual production targets.
? Achieved best ever Blast Furnace fuel rate, carbon emission intensity and specific water consumption. ? First time commercial supply of coils for ship building application and successful deployment of high alloy grades and import substitute grades in FY2023-24. ? Successful casting and rolling of 3.2% Silicon Electrical steel which will help Tata Steel develop expertise to foray into the fast-growing EV industry.
? Digital initiatives continue in all areas with focus on robotics and video analytics in safety initiatives such as energy isolation and Personal Protective Equipment (‘PPE) non-compliance tracking.
? Pilot plant for 16 TPD (Tons/day) capture and
Co
2conversion of 10 TPD methanol started to gain domain expertise for carbon footprint reduction.
? TSK achieved Zero E_uent Discharge (‘ZED) target in FY2023-24.
Strategic Initiatives
? Capacity expansion to 8 MTPA (Phase II) is underway and will augment the product portfolio with new value-added products while driving operational efficiency and reducing carbon footprint.
? Construction activities at BF#2, new Coke Ovens and BOF#3 is under progress.
? Pellet plant and Pickling Line & Tandem Cold Mill (‘PLTCM) commissioned in FY2022-23. Both the plants have ramped up their production volumes during FY2023-24.
? Caster#2 started casting in January 2024.
? Commissioning of Continuous Annealing Line (‘CAL) and Continuous Galvanising Line (‘CGL) is expected in FY2024-25.This mill will produce Advanced High Strength Steels (‘AHSS) of wider dimension and higher tensile strength which will serve Auto manufacturers for light weight higher strength steel leading to better fuel efficiency. iii) Tata Steel Meramandali
Tata Steels Meramandali (‘TSM) plant is one of Indias largest Flat Product steel production facility, equipped with steel making and finishing facilities. Crude Steel production in FY2023-24 was 5.16 MT (FY2022-23: 4.95 MT) and Saleable steel production in FY2023-24 was 4.84 MT (FY2022-23: 4.24 MT).
Year in review
? 100% iron ore requirements met through captive mines.
? Highest ever hot metal, crude steel and direct reduced Direct Reduced Iron (‘DRI) production during FY2023-24.
? Lowest ever hard coking coal usage in coke plants. ? Commissioning of Basic Oxygen Furnace (‘BOF) slag atomisation plant. Atomised plant is used in various applications like cement production, construction materials, road construction, sand blasting etc. iv) Tata Steel Gamharia
Tata Steel Gamharia, is a plant located near Jamshedpur, which is equipped with steel making and finishing facilities dedicated to Long Product steel. It has a capacity of 0.80 MTPA.
Year in review
? Pellet Plant achieved an annual capacity of 1.00 MT for the first time ever (FY2023-24 production at 0.96 MT (66% y-o-y increase).
? The Blast Furnace operations achieved its capacity of 0.65 MT, (7% y-o-y increase) through stable operations and maximising pellet and DRI usage in the Blast Furnace burden, resulted in reduction of direct _ux addition at 1.8%.
? Sponge Iron production also witnessed significant volume maximisation, with an output of 0.9 MT, up by 6% y-o-y.
? Customer claims were significantly brought down from 120 ppm to 75 ppm.
? East zone stockyard/Transport Park setup near the Gamharia plant which strengthened the logistics and supply chain process.
? Reduction of emission is identified as one
CO
2the foremost strategy under Environment and Sustainability which had been achieved by reduction in specific Coal Consumption at DRI, reduction in fuel rate of hot metal manufacture, increased captive utilisation of ferrous materials within plant boundary and by restricted operation of one coal-based power plant. There was a 13% y-o-y reduction in environment stack emissions, while solid waste utilisation increased to 99%.
Recognitions:
? CII Significant Achievement Award of TPM – May 2023 (Received in November 2023).
? CII Quality Award – Model TQM Company.
? UBS Forums Learning & Development Excellence Award in Mines & Manufacturing category.
? Tata Steel Sponge Iron Joda (‘TSSIJ) received Kalinga Safety Excellence Award under the National Safety Conclave organised by Director of Factories and Boilers, Odisha in Collaboration with Institute of Quality & Environment Management Services (‘IQEMS) Odisha.
Profit Centres Review i) Tubes Division
Tata Steels Tubes Strategic Business Unit is the leading tubes & pipe manufacturer in India, with an installed capacity of ~1.3 MTPA, having 4 manufacturing facilities at Jamshedpur, Khopoli, Sahibabad and Hosur along with its Tube Manufacturing Partners (‘TMPs) spread across eastern and northern parts of the country. Tubes SBU is presently classified through its 4 broad offerings, Structural Tubes (Tata Structura), Conveyance Tubes (Tata Pipes), Precision Tubes (Boiler, Automotive and General Engineering), and American Petroleum Institute (‘API) Pipes for Oil & Gas. Tubes division has also ventured into the Services & Solutions segment with their offerings on Tata Ezyfit (Doors and Window frames) and High-Aspect Ratio tubes.
The production and sales performance of Tubes division is as below:
Production and Sales of Tubes Division
* Tubes represents Jamshedpur tubes division and Tube manufacturing partners. From FY2022-23 onwards, it represents Jamshedpur, Khopoli, Sahibabad, Hosur and Tube manufacturing partners.
Year in review
? Achieved best-ever production of 981 KTPA and sales of 982 KTPA in FY2023-24, which is a y-o-y growth of ~12% in comparison to FY2022-23.
? FY2023-24 has been a growth story for overall tubes market with high demand across all segments. Infrastructure and construction projects were on the rise through implementation of key projects like Dedicated Freight Corridors, ‘Ude Desh ka Aam Naagrik, ‘Bharatmala, ‘Sagarmala and ‘Jal Jeevan Mission.
? Riding on the back of Vehicle Scrappage policy and EV Infra development, the automobile segment also witnessed a y-o-y growth of 6%.
? The Oil & Gas sector was driven by Governments drive on increased adoption of piped natural gas aiming towards higher coverage in City Gas Distribution (‘CGD) and Cross-Country Pipeline (‘CCP) projects. Strengthening in Oil & Gas sector, Tubes division has maintained a 22% market share in the domestic Electric Resistance Welded pipes (‘ERW), API pipes segment for Government and Public Sector Undertaking (‘PSU) tenders awarded during the year.
? Growth in the Retail Market was fuelled by Indias 8.2% GDP growth and various retail initiatives. Strong influencers connect and channel augmentation aided with ‘Bandhan, a dealer loyalty program has helped the retail business grow by 31% over the previous year. ? In the automotive sector, there is a shift in customer requirement from traditional precision tubes to high strength-lightweight tubes in line with recent Corporate Average Fuel Economy (‘CAFE) norms. ? Effective utilisation of our Large Dia Mills at Khopoli and accession to international markets has led to a 17% y-o-y growth in our Industrial and Infrastructure segment, thereby adding many marquee projects in the portfolio.
? Attained capacity expansion of 172 KTPA for the division through addition of 2 new and enhancement of 2 existing facilities of our TMPs, to elevate our product portfolio.
? Tubes division has also started increasing its presence in international markets and plans to take this to 10% of our overall sales in the coming years.
? Tubes division has remained focussed on its capability development to enhance their product portfolio for a deeper share of business with their customers across verticals. New grades developed for Automotive customers to increase their presence in Electric Vehicles and Yellow Goods segment.
? Market development for 24" Electric Resistance Welded American Petroleum Institute (‘ERW API) Coated pipes for inclusion and participation in tenders of oil and gas pipelines.
? Tubes division is in the final stages of commissioning its new Hollow Section Universal (‘HSU) mill inbuilt with the latest Direct Forming Technology that would decrease the lead time for material supplies significantly.
Recognitions:
? Tata Structura has been awarded as the ‘Most Trusted Brand of the Nation in the category of Steel Pipes at Indian Brand & Leadership Conclave 2023, organised by The Brand Story at New Delhi.
? The Global Marketing Excellence Awards, organised by World Marketing Congress, has recognised Tata Structura for its innovative green construction initiatives in the steel industry, earning praise for its commitment to sustainability, and eco-friendly construction methods. ii) Wires Division
A division of the Company, Global Wires India (‘GWI) is the largest steel wire manufacturer in India with a combined annual manufacturing capacity of 0.55 MTPA. GWI employs over 2,000 people and has manufacturing plants at Tarapur (near Mumbai), Pithampur (near Indore) as well as at Jamshedpur. GWI caters to the requirements of the Automobile, Infrastructure, General Engineering and Rural Retail markets with various steel wire offerings. The production and sales performance is as below:
Production and Sales of Wires Division
(k tonnes)
Year in review
GWI achieved an all-time high sales volume of 543 KTPA in FY2023-24 with a y-o-y growth of 16% over FY2022-23. ? Successfully commissioned 36 KTPA MTB line at Tarapur Wire Plant 1 in June 2023 and 17 KTPA GI lines at Tarapur Wire Plant 2 in November 2023 and The Indian Steel & Wire Products Limited in January 2024; 42 KTPA LRPC line is under execution at Pithampur Wire Plant (commissioning expected in Q1 FY2025-26).
? Improved diversity by increasing women workforce from 4.3% to 6.2% and started all-women general shift at Roll Shop, Wire Rod Mill (‘WRM).
Recognition:
? Won ‘Brand of the Year 2023 in the Auto and Infra category by Marksmen Daily in association with India Today.
? Tata Wiron won awards in 9 diverse categories within the automotive and infrastructure segments at the Asian Customer Engagement Forum (‘ACEF), Asian Leaders Awards ceremony.
? GWI has won prestigious ‘Corporate excellence award 2023 from Rural Marketing Association of India for its innovative product in rural fencing space – Knotted fence. iii) Tinplate Division
Erstwhile Tinplate Company of India Limited (‘TCIL) was a listed subsidiary of Tata Steel Limited and pioneered Electrolytic Tin Plate (Tinplate) manufacturing in India. With more than 100 years in existence, it has emerged as the leading tinplate manufacturing entity in India with a domestic market share of 45% in FY2023-24. It has current capacity of ~380k tonnes per annum in Jamshedpur. TCIL has amalgamated into and with Tata Steel Limited effective January 15, 2024.
Tinplate is one of the most versatile packaging substrates used for packaging of processed foods, aerosol cans, paints etc., due to its eco-friendly and excellent barrier properties vis-?-vis other packaging substrates like glass, paper, plastics, aluminium etc.
The production and sales performance is as below:
Production and Sales of Tinplate Division
During FY2023-24, the division achieved a production of 378 kt, higher by 16 kt over previous year and deliveries of 377 kt higher by 16 kt over FY2022-23.
Year in review
? Strengthening of existing infrastructure for de-bottlenecking and long-term sustenance.
? Ongoing 300 KTPA expansion project.
? FY2023-24 witnessed a growth in domestic tinplate demand by ~7% as compared to the previous year mainly driven by demand in Edible Oil (~8%) & Processed Food (~6%) segments.
Recognition:
? Two Quality Circle Teams from Tinplate Division won the Gold Standard in Chapter Convention on Quality Concept (‘CCQC) and subsequently qualified for National Convention of Quality Concept (‘NCQC), where the teams were rewarded with Excellent standard.
? Two teams participated in Kaizen Competition organised by TSD Technology at Kolkata, and both the teams were recognised – one with Gold and other with Silver. iv) Metaliks & Ductile Iron (DI) Pipes Division
Erstwhile Tata Metaliks Limited (‘TML) has its manufacturing plant at Kharagpur, West Bengal, with an annual installed capacity of 600 kt of Hot Metal i.e. Pig Iron (‘PI) and 450 kt of Ductile Iron Pipes (‘DIP). Pig Iron is used in the production of Ductile Iron Pipes. Pig iron is marketed under the brand name ‘Tata eFee and ductile iron pipe as ‘Tata Ductura. DI Pipes are used in water infrastructure projects for conveyance of drinking water, sewage and irrigation, while Pig Iron is used in foundries for manufacturing ferrous castings.
Pig Iron
Demand for PI remained subdued during the year with downward price corrections from time to time. This was due to price volatility of raw materials, weak buying sentiments and over-supply in domestic market.
DI Pipe
The DI Pipe business domestic demand was robust throughout the year with very healthy order load of 7-8 months on account of significantly increased demand from Governments water infrastructure projects under Jal Jeevan Mission (‘JJM) and AMRUT 2.0 schemes. DI Pipe exports were, however, weak, due to slow down in the global economies and shortage of funds for projects in the developing countries.
The production and sales performance is as below:
Production and Sales of Metaliks & DI Pipes Division
Year in review
? FY2023-24, the Division produced Pig iron of 120 kt, lower by 149 kt over FY2022-23 and produced DI Pipes of 398 kt, higher by 98 kt over previous year. Deliveries of PI of 122 kt lower by 140 kt over FY2022-23 in line with lower production whereas, deliveries of DI Pipes of 396k tonnes were higher by 100k tonnes over the previous year. ? DI Pipe 2 (new plant) witnessed a smooth ramp up. The Division achieved significant steps strides towards ongoing Phase-II expansion goals.
The Division is aggressively moving ahead to complete the commissioning of the entire expansion project by FY2024-25 which will significantly enhance its name plate capacity to 0.45 Mtpa. The market share of the DI Pipe Division was 12%, same as the previous year, though on much larger base.
Recognition:
? Rewarded ‘Gold Award for increasing Pulverized Coal Injection (‘PCI) rate in Blast Furnace.
? Obtained ‘Silver Award for increasing throughput of Coke Plant.
? Under Energy Excellence obtained ‘Silver Award for linear Cooler Fan speed optimisation; and ? 7th CII Kaizen competition – ‘Silver Award for Best Innovative Kaizen in Quality v) Industrial By-product Management Division
Industrial By-product Management Division (‘IBMD) manages solid wastes or by-products generated across the steel value chain. IBMD spearheads the circularity initiatives of the organisation to create value from waste by leveraging state-of-the-art technologies and new product and application development. The portfolio of IBMD spans across 25+ product categories with more than 250 Stock-Keeping Units (‘SKUs).
Year in review
? FY2023-24, the division handled ~17 MT of by-products across locations. While the division saw a 13% decrease in revenues on y-o-y basis, owing to lower metallics availability triggered by a policy change and depressed market sentiments across the year.
? In line with the decarbonisation initiative of the organisation, the current year was best ever scrap utilisation - the divisions supply of scraps to steel melt shops at TSJ, TSK and TSM was 1.9 MT
(1.5 MT in FY2022-23), which also enabled additional crude steel production.
? Steel Slag Atomisation Plant at TSM has been restarted post which dispatches of its product - Grand Shot Balls have commenced. A new FP scrap processing facility (Cut-to-Length) has been commissioned at TSM, which will help in incremental value creation for the Company.
? The division launched new brand - Tata Dureco (Ground Granulated Blast Furnace Slag) which is downstream value-added product, having extensive application in construction application. Tata Dureco achieved best ever sales of 100 KT in FY2023-24, previous best being 88 KT in FY2022-23.
? At the collieries, best ever sales of 910 KT was achieved for coal tailings against previous best of 845 KT in FY2022-23.
? IBMD collaborated with one of the coal tar customers for replacement of coal tar injection in blast furnaces at TSJ by a downstream product – Low Sulphur Fuel Oil. This initiative has helped in reducing coke rate of the furnaces and enabled additional volumes of coal tar for external sales.
? The sales of branded steel slag products Tata Aggreto and Tata Nirman from both TSJ & TSK saw further growth. Tata Aggreto has emerged as material of choice in road construction as well as for blanketing layer application in Railways.
? Strategic collaborative programs were undertaken with key cement manufacturers to maximise use of by-products of steel plants in cement production.
Recognition:
? The project ‘Sustainable Utilisation of LD Sludge in Pellet at TSM adjudged as the ‘Most Innovative Project at the CII National Award for Environmental Best Practices 2023. vi) Ferro Alloys and Minerals Division
The Companys Ferro Alloys and Minerals Division (‘FAMD) is one of the leading producer of Ferro Chrome and Manganese alloys in India. Its production facilities are integrated with production bases spanning across three Indian States and having customers across the world. FAMD has captive plants at Joda, Bamnipal, and Gopalpur and has Ferro Processing Centres (‘FPCs) under business partnering agreement for production of Chrome and Manganese Alloys.
The Sukinda Chromite mine and Gomardih Dolomite mine leases expired as per the mining regulations on March 31, 2020. The Sukinda Chromite Mines was put up for auction and subsequently Tata Steel Mining Limited, a wholly-owned subsidiary (having merged with the Company) of Tata Steel Limited won the auction for the mine. The production and sales performance is as below:
Production and Sales of FAMD
Note: *Production and sales for FY2023-24 and FY2022-23 include Tata Steel Mining Limited post-merger.
During the financial year 2023-24, the production was lower primarily on account of lower Chrome ore production. During FY2023-24 deliveries were lower over
FY2022-23 primarily due to lower sales of Chrome ore post increase in Government notified royalty rates.
Year in review
? FAMD did its first ever sales of 49 T Stainless Steel fiat from old stock of Bishnupur plant by developing a new customer, thereby being future ready for Stainless Steel business.
? Environmental Clearance (‘EC) was obtained for enhanced production of Saruabil Chromite Mine (0.35 MT per annum to 1 MT per annum) and Kamarda Chromite Mine (0.088 MT per annum to 0.30 MT per annum).
Recognition:
FAMD has been adjudged in ‘Excellence in Biodiversity under CII-ITC Sustainability Awards. vii) Bearings Division
Tata Steels Bearings Division is one of Indias quality Bearing manufacturers, having its manufacturing facility located at Kharagpur, West Bengal with an annual production capacity of ~40 million Bearing numbers.
The Company is foremost in the manufacturing of a wide variety of Bearings and the product range includes Ball Bearings, Taper Roller Bearings and Magneto Bearings. The division is the first Bearings manufacturer in India to win the Total Productive Maintenance Award (2004) from Japan Institute of Plant Maintenance, Tokyo.
The production and sales performance is as below:
Production and Sales of Bearings Division
During the year under review, the division produced ~34 million numbers and achieved deliveries of ~33.6 million numbers which were marginally higher over FY2022-23.
Year in review
? Achieved its best ever Sales in the Aftermarket segment. ? Developed and commercialised new products for Electric Vehicles, Automotive and Tractor segments. ? Launched Lithium Based EP2 Grease (Extreme Pressure Grease) – for Industrial applications.
Subsidiary Companies Review
(i) Neelachal Ispat Nigam Limited
The Company completed the acquisition of Neelachal Ispat Nigam Limited (‘NINL) in the month of July 2022. The NINL Plant is situated at Kalinganagar industrial complex of Duburi in the Jajpur district of Odisha. The prime product of NINL is Long Product i.e. Rebar. NINL is converting its Billets into Rebars in collaboration with Tata Steel Planning and Steel Processing Centers team. Also, in synergy with the M&S team of Tata Steel rebars are introduced in the Tiscon brand in the market. The turnover and profit/(loss) of NINL for FY2023-24 are as follows:
| FY24 | FY23 | |
| Turnover | 5,505 | 1,646 |
| EBITDA | 53 | (770) |
| Profit before tax (PBT), before | ||
| (981) | (1,508) | |
| exceptional | ||
| Profit before tax (PBT) | (1,012) | (1,508) |
| Profit after tax (PAT), before exceptional | (929) | (1,218) |
| Profit after tax (PAT) | (960) | (1,218) |
The performance of NINL Business is included in FY2022-23.
The production and sales performance of NINL is given below:
| (mn tonnes) | |||
| FY24 | FY23 | Change (%) | |
| Crude Steel | 0.66 | 0.20 | 228 |
| Saleable Steel | 0.65 | 0.17 | 287 |
| Sales | 0.65 | 0.17 | 289 |
During FY2023-24, NINL produced 1,114 kt of pig iron (FY2022-23: 177 kt). Crude steel production was at 663 kt (FY2022-23: 202 kt).
Deliveries of Pig Iron in FY2023-24 was 358k tonnes (FY2022-23: 125 kt). Steel deliveries was 649 kt (FY2022-23: 167 kt) due to full year of operations during the current year.
Turnover of FY2023-24 increased over FY2022-23 significantly by H3,860 crore primarily due to higher deliveries of pig iron and steel owing to full year of operations during the year. The loss after tax of FY2023-24 at H960 crore was lower against a loss of H1,218 crore in FY2022-23 primarily due to better operational performance during the year.
Year under Review
? Reached designed production rate of 1 million tonnes within nine months of start-up.
? Successful commission of Coke Plant Battery within nine months along with Coke Dry cooling Plant, Coal and Coke Handling and E_uent treatment facility. This is done for the first time in India, where a closed Coke oven battery started with temporary repairing. ? Achieved highest crude steel and pig iron production in a fiscal year i.e. 0.981 MT in FY2023-24 which is as per the rated capacity.
? Sinter Plant achieved highest ever Sinter Production in a fiscal year since inception i.e. 1.28 MT.
? The effluent treatment facility upgraded to meet all the environmental norms and successfully commissioned within due timeline.
? Setting up of Mobile MRP plant in NINL. It is the first time in Tata Steel eco system which is set to meet the internal scrap demand of the plant.
? Highest Calibrated Lump Ore (‘CLO) & Fines Production are achieved i.e. 1.88 MT against the previous best of 0.96 MT in FY2022-23.
Financial Highlights
? Capex of ~H340 crore was spent out of internal accruals on sustenance activities.
? The Company launched Voluntary Separation Scheme on November 15, 2023 for executive level and 63 employees have opted for the scheme. A charge of H31 crore is taken on this account under exceptional items.
Strategy
NINL will play a critical role in Tata Steels long product growth aspirations as it gets transformed into a state-of-the-art long products complex. There are plans to expand up to ~9.5 million tonnes per annum in a decades time, forming a big part of Tata Steels target of reaching 40 MTPA capacity.
Safety and Sustainability
? NINL has submitted application for EC for its expansion from 0.981 MTPA to 9.5 MTPA.
? ‘Cast house dedusting system project work has started at NINL Blast furnace for dust and fumes extraction from cast houses of Blast Furnace, which will lead to a cleaner and greener environment.
(ii) Tata Steel Downstream Products Limited
Tata Steel Downstream Products Limited (‘TSDPL) is a leader in the organised Steel Service Centre business in India. TSDPL has a Pan-India presence with ten steel processing plants and thirteen distribution and sales locations. Value-added offerings of TSDPL include slitting, cut-to-length, blanking, corrugation, plate burning, fabrication, component manufacturing and steel intensive products and applications. TSDPLs products and services conform to world class quality standards in meeting customers demand. Its entire operations including supply chain runs on a state-of-the-art Enterprise Resource Planning (‘ERP) system.
The turnover and profit/(loss) figures for the Financial Year 2023-24 are as follows:
| ( H crore) | ||
| FY24 | FY23 | |
| Turnover | 7,563 | 7,394 |
| Profit before tax (PBT) | 275 | 294 |
| Profit after tax (PAT) | 232 | 246 |
Despite challenging market conditions, the financial year 2023-24 was a rewarding one for TSDPL, as reflected in its good financial performance. During the year, TSDPL delivered its highest-ever turnover of H7,563 crore. It was achieved on the back of highest ever volumes of 3.55 million tonnes despite pressure on steel prices. The slump in automotive sales from December 2023 onwards affected EBITDA and PBT.
Slump in the Commercial Vehicles from December 2023 adversely impacted sales to automotive customers under Vendor Servicing Model where exposure is 40% of total distribution volumes.
Intense competition in Hot Rolled segment impacted margins of Astrum brand with existing customers. Lower export of Mining Equipment by Caterpillar from India in FY2023-24 adversely impacted TSDPLs Plate Fabrication business. Higher domestic prices compared to China impacted plan to ramp up exports.
Year in Review
TSDPL took up 6 key priorities for FY2023-24 Safety, Sustainability, Growth, Customer, Digital, Operational Excellence, Learning & improvement.
Safety - TSDPL continued its efforts on its safety journey through its key safety strategies. However, there were
9 LTIs during the year and TSDPL is committed to accelerating our efforts on improving safety.
Sustainability - TSDPL launched several initiatives to reduce power consumption, conserve water and reduce carbon footprint by adopting the CII GreenCo framework. TSDPL achieved the lowest ever Carbon Footprint
(Scope 1&2) of 4.050 KgCO
2e/MT.Customer - TSDPLs customer excellence journey named ‘Project Utkarsh continued to bear fruits during FY2023-24. Key Account management was stabilised and TSDPL ended the year with 47 key accounts who were given differentiated service. TSDPL achieved lowest ever complain resolution time of 14 days during the year. Growth - Long-term Plan was formulated with a plan to achieve 10 MT by FY2029-30. Sanand Steel Service Center set up work is in full swing and is expected to be completed within the scheduled time. Capacity expansion at Ranjangaon Unit for Cold Roll Slitting and Narrow Cut to Length operations is also on schedule with load trials planned in April 2024. New business added new products viz. Fire Alarm panel, Jewellery Safe, Stainless Steel Safe and Stainless-steel IT Racks during the year.
Digital - Digital Roadmap created for TSDPL under ‘Project DigiYaan. Project SPARC was undertaken during the year to implement Supply Chain Management Solution ‘Blue Yonder. The Demand Planning User Acceptance Testing was completed during the year and Supply Planning will be taken up in FY2024-25 to complete the implementation. This will help improve On Time In Full (‘OTIF) and improve visibility. TABLEAU Dashboards introduced for monitoring of Operational Metrics like Volumes, Inventory, Collection and Payments. Operational Excellence – Focus on TQM led to highest ever capacity utilisation of 83%. EBITDA improvement Program - Lakshya led to savings of H12.5 crore.
Recognition:
? TSDPL was rated as Industry Leader in Tata Businees Excellence Model (‘TBEM) with an assessment score of 653.
? Jamshedpur CR Unit won 1st position in CII Kaizen competition in large industries segment.
b) Marketing and Sales
During the FY2023-24, the Company recorded sales of 19.91 MT, which is higher over the previous year by 6%. Sales performance are summarised as below:
| (mn tonnes) | ||
| FY24 | FY23 | |
| Automotive & Special products | 2.91 | 2.69 |
| Branded Products, Retail & Solutions | 6.53 | 5.85 |
| Industrial Products & Projects | 7.68 | 7.24 |
Domestic |
17.12 | 15.78 |
| Exports | 1.04 | 1.61 |
Domestic + Exports |
18.16 | 17.39 |
| Transfers (Tinplate, Wires, Tubes, IBMD, | ||
| 1.75 | 1.46 | |
| Agrico) | ||
Total Deliveries |
19.91 | 18.85 |
FY2023-24 turned out to be the year of best-ever sales performance surpassing the previous best performance of FY2022-23.
Automotive and Special Products
The Indias Passenger Vehicle (‘PV) industry registered record domestic sales in FY2023-24 making India the 3rd largest PV market in the world. The PV segment witnessed robust production growth of 6% y-o-y driven by new model launches and a continuation of consumer preference towards Sports Utility Vehicles (‘SUVs). The Medium and Heavy Commercial Vehicle (‘MHCV) segment registered a growth of ~3% y-o-y supported by replacement demand, and healthy traction for infrastructure, mining, and construction activities. However, overall, the Commercial Vehicles segment recorded a growth of 1% y-o-y with Light Commercial Vehicles (‘LCVs) registering a marginal decline (1% y-o-y). Tata Steels Automotive Segment registered sales of 2.91 MT in FY2023-24, with a y-o-y growth of 8%, focusing on high strength new product development. Tata Steel recorded a 6% growth in high-end product sales and continues to command market leadership and high share of business in new model launches.
Branded Products and Retail
Branded Products and Retail (‘BPR) Flat Products (‘FP) clocked sales volume of 4.5 MT with y-o-y growth of 10%. Overall growth was driven by key FP brands viz. Tata Astrum, Tata Steelium and Tata Kosh, which registered growth ranging from 8%-16% each and enhanced its market share to 25%. The Flagship Emerging Corporate Account (‘ECA) brands Tata Astrum (the hot rolled brand for MSMEs) and Tata Steelium (the cold rolled brand for MSMEs) clocked their best ever annual sales of 3.45 MT, while expanding their presence into 80+ micro-segments. Tata Astrum Super, retail brand of HR, commemorated its 5-year journey on March 7, 2024 and has registered 57% CAGR since its launch.
In the ECA space, to support MSME growth and capability building, knowledge sharing sessions ‘Create (Value in Use Initiatives), ‘Techtalk, ‘Skilling India and ‘InsIITe (organised in collaboration with IIT, Mumbai and IISc, Bangalore) were conducted for MSME customers across different regions. These initiatives aim to share technology updates, discuss on upcoming product and services to meet evolving need of discerning customers, and create value for key stakeholders. Through these curated platforms, Tata Steel connected over 5,000 ECAs in FY2023-24. Two new customised micro-segment specific programs, ‘Railcon for customers in the railway segment and ‘AgriNext for Agri-implement manufacturers, were introduced in FY2023-24 to communicate value proposition of Tata Steels ECA brands viz. Tata Astrum, Tata Steelium and Galvano.
In the B2C space, the flagship galvanized brands, Tata Shaktee & Tata Kosh conducted farmer meets – ‘Kissan Diwas celebrations where ~33,000 farmers were directly connected. 70+ new learning modules were launched in Learners Academy, the Area Sales Officer and Business Manager (‘ASO BM) training portal, which saw introduction of AI Based Coaching and evaluation mechanism for the first time called RUBRICS. On digital front, the usage of Shaktee Kosh Rewards, an app-based loyalty program for dealers & fabricators, nearly doubled in FY2023-24 compared to last year. Tata Steels marketing efforts in fiat products recognised with Tata Kosh receiving the ‘Iconic brand of India award by the Indian Brand and Leadership Conclave 2023 and Tata Shaktee being awarded the ‘Iconic brand of India for the 3rd time by The Economic Times.
Tata Tiscon touched the milestone of 2 MT sales (growth of ~15% y-o-y & best ever sales volume) in Retail in FY2023-24. This was enabled by enhancing dealer base across the country to 10,000 covering 8,500+ pin codes and enriched engagement with ~6,00,000 consumers and ~20,000 active influencers. Tiscon launched new Brand Campaign ‘Samajhdar Bane Behtar Chune to enable potential consumers to take smarter decisions by choosing tangible product benefits offered by Tata Tiscons 550 SD Rebars. The campaign generated 3.1 million impressions through its various social media handles. The brand also enhanced its Tiscon ‘Grand Masters program further in FY2023-24 and strengthened collaboration with Architect, Contractors & Engineers (‘ACE) community to enable consumers to build their dream homes. ACEs are the initial touchpoints for an Individual Home Builder (‘IHB) and play a pivotal role in providing the required guidance on design and building materials including TMT rebars, cement, paints etc. 3,600+ new ACEs were onboarded, and 2,00,000 MT sales (highest-ever sales through ACEs) was achieved in FY2023-24. For the first time-ever, an engineers and architects summit called ‘Core (representing ‘Constructing responsibly) was organised which saw participation from 100+ attendees. The event included knowledge sharing by distinguished speakers, recognition of outstanding performers and showcased Tata Steels diverse construction product portfolio.
Industrial Products, Projects and Exports
Industrial Products, Projects and Exports (‘IPPE) including export sales during FY2023-24 was 8.7 MT with domestic sales of 7.7 MT and Exports of 1.04 MT. In FY2023-24, Domestic sales for IPPE registered a growth of ~6% led by growth in discerning segments and sub-segments of Engineering and Downstream products backed by stable domestic demand.
Engineering segment & Value-Added Products
Tata Steel continued its focus on engineering segments and Value-Added Products (‘VAP) through product mix enrichment, robust customer connects and new product development. Engineering Segments achieved best-ever sales of ~790 KT enabled by healthy growth across all key sub-segments such as Railways (87% y-o-y), Lifting & Excavation (16% y-o-y) and Pre-Engineered Buildings (6% y-o-y). VAP segments viz. LPG, Precision Tube (‘PT) and Medium Carbon High Carbon registered a y-o-y growth of ~5% over FY2022-23. Through Engineering Segments, IPPE contributed towards (a) construction of 2,300 kms of O&G pipeline including supplies to the prestigious project of GAIL-KKBMPL (Kochi-Koottanad-Bangalore-Mangalore Gas Pipeline) PH-II for Krishnagiri to Coimbatore section, foundation stone laid by Honourable Prime Minster Shri Narendra
Modi, (b) construction of ~48 Mn sq. ft of PEB structures, (c) production of ~32,000 construction equipment and enabled import substitution by developing and commercialising high-strength grades for our discerning customers in Lifting & Excavation segment, and (d) supplies to marquee projects viz. Micron Technologys advanced semiconductor plant (in Sanand, Gujarat), Dhubri-Phulbari bridge which is Indias longest river bridge spanning more than 19 Km connecting Assam and Meghalaya, and many more.
Downstream: Flat Product Downstream registered sales of ~1,092 KT in FY2023-24 with an overall growth of 21% over FY2022-23 (897KT) supported by robust growth in Building & Construction segments (756 KT, 52% y-o-y) and Capital Goods & General Engineering (60 KT, 54% y-o-y). Key segments viz. Appliance & Furniture and Electrical Lamination also registered sales growth with focus on serviceability, product development and customer addition. The business successfully ramped-up new PLTCM at TSK through sales of FHCR (Full Hard Cold Rolled) and development of niche applications in Key Segments. Achieved growth in sales to Tata BlueScope Steel Private Limited a key partner in serving coated materials to Building & Construction segment (~190KT in FY2023-24 as against ~47KT in FY2022-23). Industrial Products and Projects Downstream business also supplied ~24KT coated products to solar segment (93% growth y-o-y, 15% Market Share) contributing to nations Renewable Energy initiatives.
Long Products Downstream business contributed ~300 KT of sales in FY2023-24, a growth of 40% over FY2022-23. Tiscon ReadyBuild Sales (Cut & Bend rebar solution) crossed 280 KT mark and Sm@rtFAB (Welded Wire Fabric solution) clocked 11 KT which accounted for 2X growth, both achieving their highest-ever sales. In an effort to become leaders in construction solutions by shaping the market and becoming knowledge-intensive leaders, Tata Steel focused on capacity expansion (currently operating with 35 world-class service centres), serviceability, and customisation of solutions for all our customers. Key Marquee projects which were served through solutions provided by the Company were Ahmedabad-Mumbai Bullet Train, Delhi Meerut Regional Rapid Transit System (‘RRTS), Mumbai trans harbour link, Sudarshan Sethu, Bangalore metro and Pune metro.
Wire Rods & SBQ and Specialty Steel: In FY2023-24 sales growth of 11% y-o-y was recorded in Continuous Welding Electrode segment (109 kt sales w.r.t 98 kt in FY2022-23) as it focused on attaining the most preferred supplier status with its customers. New grade (WR3M (n)-
Titanium added) was developed in this segment in order to meet customer requirements. The segment continued to maintain its share of business with discerning customers. Memorandum of Understanding (‘MOUs) were signed with ~10 new customers to secure monthly volumes and share of business. In FY2023-24 14% y-o-y sales growth was attained in specialty steel segment (620 kt sales w.r.t 545 kt in FY2022-23) with focus on mix enrichment and on attaining the most preferred supplier status with its customers and Tier-1 OEMs. ~50+ new products were developed in key consuming segments like 2W, PV, Bearings and Component exports. Key OEM Approvals were also received from leading two-wheeler manufacturers.
Services & Solutions: In FY2023-24, Tata Pravesh Doors and Windows registered Gross Merchandise Value of H315 crore. The installation figures have been steady y-o-y at ~145K units. The brand expanded its Privileged Dealer Program network to ~500 outlets in this year. Pravesh also continued to render superior and uniform customer experience through augmented IT infrastructure and best in class industry practices through Authorised Service Centre – ‘SmartCare, increasing the presence to 15 numbers in FY2023-24 from the baseline of 7 numbers in FY2021-22. This has resulted in enhancement of NPS score to 70 in FY2023-24 as compared to 61 in FY2022-23. Nest-In achieved 20% y-o-y revenue growth in FY2023-24 by clocking H215 crore with 2.5X growth in EBITDA (H16 crore in FY2023-24 vis-?-vis H 6 crore In FY2022-23). Nest-in also augmented its business by expanding order base of external customers (>55% of total order contribution) resulting in smooth handing over of ~120+ projects spanning around 7.1 lac sqft.
Digital Initiatives: Tata Steel Aashiyana, an early engagement and online platform for Individual Home Builders achieved a growth of 27% in FY2023-24 over FY2022-23. Aashiyana moved from 5% (~100 crore GMV) digital payments in FY2022-23 to 100% in FY2023-24
(~H2,200 crore) Gross Merchandise Value). The platform used analytics-based insights to understand customers more closely and shortened website check-out time by 20% and reduced cart abandonment rate by 10%. This has enhanced consumer experience and resulted in increase of NPS score to 65 in FY2023-24 from 59 in FY2022-23. Tata Steel rolled out its integrated digital ecosystem platform, Sampoorna 2.0 for Tata Tiscon. Currently, entire Tiscon dealer force (~10,000) is connected through Sampoorna 2.0 platform.
Furthermore, to be future ready a B2B e-commerce platform, DigECA, is being designed to streamline direct engagement of MSMEs with Tata Steel and its associated stakeholders. The platform enhances customer satisfaction by introducing specialised modules that focus on increasing user convenience. Features integrated into these modules provide customers with digital experience with end-to-end order generation and fulfilment features.
c) Engineering & Projects
In FY2023-24, Engineering & Projects (‘E&P) Division continued its endeavour to deliver sustained value to stakeholders by supporting Tata Steels growth and sustenance projects. Focused efforts were made to accelerate the progress of capital projects amidst volatile market conditions and uncertain business environment. Continuous efforts are being made to prioritise capital projects considering future market opportunities, decarbonisation/sustainability impact and business value proposition. As such significant progress has been made in: ? Key growth projects such as 2nd phase expansion of TSK, Iron ore and coal expansion projects, setting up of electric arc furnace (‘EAF) at Ludhiana for supporting Tata Steels decarbonisation initiatives and for achieving cost competitiveness, set up/expansion of Tata Steel downstream processing units supporting market share of value-added segments etc.
? Many large sustenance, improvement and environment projects have been undertaken across Tata Steel sites of Jamshedpur, Kalinganagar, Meramandali etc., including new Air separation Units, Blast Furnace (‘BF) relining jobs, coke oven batteries replacements, mill drive upgradations, infrastructure projects including housing & hospitals, few solar projects etc.
With timely project execution, safety is the topmost priority for Tata Steel. Engineering & Projects Division. achieved zero fatality in FY2023-24 and implemented various safety initiatives which led to reduction in red risk incidents.
Many digitalisation initiatives are also in progress such as Integrated Project Management System to provide end-to-end visibility of the projects on a single platform. During FY2023-24, the division successfully achieved following milestones across various projects such as:
Raw Material & Others
? Commissioning of Baitarani cross country water pipeline (19 km) and major electrical work at Noamundi.
? Statutory clearances received for start of construction work for EAF Ludhiana and construction commenced.
Tata Steel Jamshedpur
? injection project at LD1 commissioned.
CO
2? LD & BF sludge briquetting unit commissioned. ? Zero Liquid Discharge (‘ZLD) projects of Cold Rolling Mill (‘CRM) Bara, LD1 & LD2 commissioned.
? Commissioning of 2 MWp Solar Power Plant.
Tata Steel Kalinganagar
? Completion of Pellet Plant both circuits and SMS Already defined earlier Caster#2.
? Commissioning of South Rail Line Connectivity reducing turnaround time of rake entry.
? Progressive construction completion of Phase-2 project facilities like Blast Furnace#2, Coke Ovens, etc.
Tata Steel Meramandali
? Completion of 3 nos. Dust Extraction (‘DE) Systems at Direct Reduced Iron (‘DRI) plant and one number DE System in Sinter Plant.
? Completion of Ladle Tilter with Transfer Car at BOF (Basic Oxygen Furnace) and Tar Settling Tank at Coke Oven – 2.
The division also successfully completed longest gallery erection of 230 MT at Overland Conveyor System, Noamundi and dispatched single largest consignment of 145 MT Hot Metal Desulphurisation Combined Car from Tata Growth Shop.
Currently, Tata Steel has embarked on its aspiration of doubling its crude steel capacity to ~40 MTPA. Growth proposals across key expansion sites are being pursued while ensuring consideration to decarbonisation targets. To be future-ready, following key initiatives have been taken at divisional level to enable us to fuel our future growth ambitions: ? Workforce capability building initiatives in key knowledge domains through tie up with leading academia and professional bodies.
? Enhancing construction safety and inculcating a culture of safety along with devising policies for ensuring horisontal deployment of safety policies across all sites.
? Strengthening & enhancing in-house manufacturing & fabrication capability & capacities.
? Ramping up infrastructure, amenities, and logistics capacity.
? Increasing vendor base in identified categories and strengthening supplier partnerships.
? Driving digital transformation within the division.
VI. FINANCIAL PERFORMANCE
Standalone Performance
1. Tata Steel Limited
During FY2023-24, the Company recorded a profit after tax of H4,807 crore (previous year:
H14,685crore).Thedecreaseisprimarilyonofaccounthigher charge under exceptional items owing to impairment of investments in group companies. Excluding the impact of charge under exceptional items, the profit increased due to higher operating profits as compared to the previous year attributable to higher sales volume and lower raw material costs due to decrease in raw material prices mainly of coking coal and lower purchase of pellets, which was partly offset by, decrease in steel realisations. Finance cost was higher due to additional loans taken during the year. The basic and diluted earnings for FY2023-24 were at H3.85 per share each (previous year: basic and diluted: H11.76 per share each).
The analysis of major items of the financial statements is given below:
a) Revenue from operations
| FY24 | FY23 | Change (%) | |
| Sale of products | 137,284 | 139,669 | (2) |
| Sale of power and water | 1,913 | 1,775 | 8 |
| Other operating revenue | 1,790 | 1,469 | 22 |
Total revenue from |
|||
| 140,987 | 142,913 | (1) | |
operations |
During the year under review, sale of products was marginally lower as compared to that of the previous year, primarily due to decrease in realisations in domestic as well as export markets, partly offset by higher steel deliveries by 1.06 MT. Sale of power and water and other operating income increased in line with higher demand and prices.
b) Purchases of stock-in-trade
| ( H | crore) | |||
| FY24 | FY23 | Change (%) |
||
| Purchases of stock-in-trade | 9,702 | 7,424 | 31 | |
During the year under review, purchases of stock-in-trade was significantly higher as compared to the previous financial year primarily due to higher purchase of traded rebars from NINL and Tata Steel Thailand. These were partly offset by decrease in external scrap purchases as own generated pooled iron was utilised.
c) Cost of materials consumed
| ( H crore) | |||
| FY24 | FY23 | Change (%) | |
| Cost of materials | |||
| 48,018 | 59,949 | (20) | |
| consumed |
During the year under review, cost of materials consumed reduced primarily due to decline in imported coking coal prices, along with lower cost of purchased pellets post commencement of pellet plant at Kalinganagar during the year.
d) Employee benefits expense
| ( H | crore) | |||
| FY24 | FY23 | Change (%) |
||
| Employee benefits expense | 7,402 | 7,221 | 3 | |
During the year under review, the employee benefits expense increased primarily due to salary revisions and its consequential impact on retirement provisions along with increase in leave salary and staff welfare expenses.
e) Depreciation and amortisation expense
| ( H crore) | |||
| FY24 | FY23 | Change (%) | |
| Depreciation and | |||
| 5,970 | 5,956 | - | |
| amortisation expense |
The depreciation charge during the year is at par with the previous year as the higher charge for new additions during the year, was offset by assets fully depreciated during the year.
f) Other expenses
| ( H | crore) | |||
| FY24 | FY23 | Change (%) |
||
| Other expenses | 45,661 | 41,379 | 10 | |
Other expenditure represents the following expenditure:
| ( H crore) | |||
| FY24 | FY23 | Change (%) | |
| Consumption of stores and | |||
| 8,024 | 7,217 | 11 | |
| spares | |||
| Repairs to buildings | 91 | 98 | (6) |
| Repairs to machinery | 5,474 | 5,345 | 2 |
| Relining expenses | 230 | 232 | (1) |
| Fuel oil consumed | 1,028 | 897 | 15 |
| Purchase of power | 5,535 | 5,733 | (3) |
| Conversion charges | 2,340 | 3,001 | (22) |
| Freight and handling | |||
| 7,706 | 7,488 | 3 | |
| charges | |||
| Rent | 152 | 92 | 66 |
| Royalty | 6,511 | 6,717 | (3) |
| Rates and taxes | 2,250 | 1,654 | 36 |
| Insurance charges | 265 | 252 | 5 |
| Commission, discounts and | |||
| 286 | 296 | (3) | |
| rebates | |||
| Allowance for credit losses/ | |||
| 110 | 6 | 1,604 | |
| provision for advances | |||
| Other expenses | 6,646 | 3,436 | 93 |
| Less :-Expenditure (other | |||
| than interest) transferred to | (987) | (1,085) | (9) |
| capital & other accounts | |||
Total Other expenses |
45,661 | 41,379 | 10 |
Other expenses were higher as compared to the previous financial year primarily due to lower foreign exchange revaluation gain on inter-company loans/receivables during the current year after conversion of loan to group company into equity. Increase in rates and taxes on account of higher charges for District Mineral Fund and previous year included reversal of entry tax provision. Moreover, there was increase in other general expenses mainly in travelling, brand equity, CSR and others. Consumption of stores and spares increased mainly due to increase in maintenance activities during the year. Increase in expense was partly offset by, decrease in conversion charges mainly in the ferro alloys business owing to lower production and sales during the year. Decrease in royalty charges was mainly due to lower production of chrome ore, partly offset by increase in Government notified prices of chrome ore and higher quantities of iron ore sold during the year.
g) Finance costs and net finance costs
| ( H crore) | |||
| FY24 | FY23 | Change (%) | |
| Finance costs | 4,179 | 3,975 | 5 |
| Net Finance costs | 2,227 | 1,926 | 16 |
During the year under review, finance costs increased primarily on account of higher interest on domestic term loans owing to fresh utilisation during the current financial year for capital expansion projects, partly offset by lower interest on short-term borrowings, commercial papers and debentures attributable to lower balances during the year.
Net finance charges were higher primarily on account of higher finance cost, along with lower interest income on Inter-Corporate Deposits (‘ICDs) post conversion into equity, and lower gain on sale of mutual funds.
h) Exceptional items
| FY24 | FY23 | Change (%) | |
| Exceptional items | (13,636) | (780) | N.A. |
The details of exceptional items for the current year and previous year are as follows: ? Profit on sale of investments held in subsidiaries and Joint Ventures: NIL (previous year: H339 crore). ? Provision for Impairment of non-current assets (net) H179 crore mainly in Property, Plant and Equipment including intangibles for Sukinda mines (previous year: NIL).
? Provision for Impairment of investments/doubtful advances (net of reversals) H12,971 crore (previous year: H1,056 crore).
? Restructuring and other provisions H405 crore for closure of Sukinda mines. (previous year: H2 crore). ? Provision for Employee Separation Scheme (‘ESS) under the Sunehere Bhavishya Ki Yojana (‘SBKY) Scheme and other schemes amounting to H 99 crore
(previous year: H92 crore).
? Fair valuation gain on investments classified as fair value through profit and loss (net) amounting to H18 crore (previous year: gain of H31 crore).
i) Property, Plant and Equipment (PPE) including intangibles and right-of-use assets
| ( H crore) | |||
| FY24 | FY23 | Change (%) | |
| Goodwill | 13 | 13 | - |
| Property, Plant and | |||
| 90,807 | 90,277 | 1 | |
| Equipment | |||
| Capital work-in-progress | 27,196 | 21,654 | 26 |
| Intangible assets | 968 | 1,233 | (22) |
| Intangible assets under | |||
| 532 | 515 | 3 | |
| development | |||
| Right of use Assets | 5,649 | 5,900 | (4) |
Total PPE inlcuding |
|||
intangibles & right-of- |
125,165 | 119,592 | 5 |
use assets |
The movement in total PPE including intangible is higher primarily on account of increase in capital work-in-progress mainly at Kalinganagar Phase-II and normal additions at Kalinganagar plant during the year, which was offset by depreciation and amortisation charge during the year.
j) Investments
| ( H crore) | |||
| FY24 | FY23 | Change (%) | |
| Investment in Subsidiary, | |||
| 57,554 | 33,120 | 74 | |
| JVs and Associates | |||
| Investments - Non-current | 7,945 | 6,348 | 25 |
| Investments - Current | 500 | 2,968 | (83) |
Total Investments |
65,999 | 42,436 | 56 |
The increase in investments was predominantly on account of conversion of ICD to T Steel Holdings Pte. Ltd. into equity during the year. Increase in non-current investments was mainly due to change in the market value of quoted investments along with interest accrued on preference shares of NINL. These increases were partly offset by decrease in current investments post sale of units of mutual funds.
k) Inventories
| ( H crore) | |||
| FY24 | FY23 | Change (%) | |
| Finished and semi-finished | |||
| goods including stock in | 8,203 | 8,573 | (4) |
| trade | |||
| Work-in-progress | - | - | NA |
| Raw materials | 11,537 | 12,158 | (5) |
| Stores and spares | 4,807 | 4,689 | 3 |
Total Inventories |
24,547 | 25,420 | (3) |
Finished and semi-finished inventory decreased as compared to previous year mainly due to decrease in cost of finished and semi-finished goods along with decrease in stock quantities as compared to the previous year due to higher deliveries.
Raw material inventories have decreased over the previous year primarily on account of decrease in the prices of imported coal during the year, partly offset by higher quantity of coking coal.
Stores and spares inventory increased due to higher requirement.
l) Trade receivables
| FY24 | FY23 | Change (%) | |
| Gross trade receivables | 1,865 | 3,235 | (42) |
| Less: allowance for credit | |||
| 259 | 673 | (62) | |
| losses | |||
Net trade receivables |
1,606 | 2,562 | (37) |
Trade receivables reduced significantly as compared to that of the previous year primarily due to better collections and higher factoring of steel debtors along with decrease in steel prices. Decrease at profit centres primarily at FAMD due to decrease in sales attributable to lower volumes.
m) Gross debt and Net debt
| FY24 | FY23 | Change (%) | |
| Gross debt | 44,579 | 43,304 | 3 |
| Less: Cash and Bank | |||
| balances (incl. Non-current | 6,055 | 2,927 | 107 |
| balances) | |||
| Less: Current investments | 500 | 2,968 | (83) |
Net Debt |
38,024 | 37,409 | 2 |
Gross debt was comparatively higher due to utilisation of various term loans during the year majorly for funding capital expansion projects, partly offset by net repayment of short-term loans and debentures during the year.
Net debt was marginally higher as compared to previous year. This is attributable to increase in the in gross debt along with decrease in current investments, partly offset by increase in cash and bank balances.
n) Cash Flows
| FY24 | FY23 | Change (%) | |
| Net Cash from/(used in) | |||
| 27,328 | 13,506 | 102 | |
| operating activities | |||
| Net Cash from/(used in) | |||
| (15,558) | (14,794) | (5) | |
| investing activities | |||
| Net Cash from/(used in) | |||
| (8,414) | (5,193) | (62) | |
| financing activities | |||
Net increase/(decrease) |
|||
in cash and cash |
3,356 | (6,481) | 152 |
equivalents |
Net cash flow from/(used in) operating activities
During the year under review, the net cash generated from operating activities was H27,328 crore as compared to H13,506 crore during the previous year. The cash inflow from operating profit before working capital changes and direct taxes during the current year was H29,400 crore as compared to inflow of H26,003 crore during the previous year due to increase in operating profits. Cash inflow from working capital changes in FY2023-24 is mainly due to decrease in non-current/current financial and other assets by H1,947 crore, in trade receivables and other advances with public bodies along with decrease in inventories by H901 crore primarily due to decrease in prices. Increase in Non-current/current financial and other liabilities/ provisions by H125 crore primarily due to increase in trade payables for coal purchases and other liabilities. The income taxes paid (net of refund received for earlier years) during the current year was H5,045 crore as compared to H5,008 crore during previous financial year.
Net cash flow from/(used in) investing activities
During the year under review, the net cash outflow from investing activities amounted to H15,558 crore as compared to H14,794 crore during the previous year. The outflow during the current year broadly represents capex of H10,426 crore, investments in subsidiaries H684 crore mainly in The Indian Steel & Wire Products Limited and Neelachal Ispat Nigam Limited, ICDs given (net of realisation) amounting to H 8,011 crore, partly offset by net sale of current investments H 2,667 crore.
Net cash flow from/(used in) financing activities
During the year under review, the net cash outflow from financing activities was H8,414 crore as compared to an outflow of H5,193 crore during the previous year. The outflow during the current year broadly represents payment of dividend H4,414 crore and payment of interest H5,098 crore. The outflow was partly offset by, additional
loans taken during the year (net of repayments including finance lease) H947 crore as against net proceeds from borrowings of H5,101 crore in the previous year.
o) Changes in Key Financial Ratios
The change in the key financial ratios as compared to previous year is stated below:
| FY24 | FY23 | Change (%) | |
| Inventory Turnover (days) | 67 | 64 | 5 |
| Debtors Turnover1 (days) | 5 | 7 | (29) |
| Current Ratio (Times) | 0.80 | 0.90 | (12) |
| Interest Coverage Ratio | |||
| 10.01 | 10.74 | (7) | |
| (Times) | |||
| Debt Equity (Times) | 0.33 | 0.33 | 1 |
| Net Debt Equity (Times) | 0.28 | 0.28 | (1) |
| EBITDA Margin (%) | 21.99 | 20.12 | 9 |
| Net Profit Margin2 (%) | 3.41 | 10.28 | (67) |
| Return on average Net | |||
| 3.51 | 11.10 | (68) | |
| worth2 (%) |
1) Debtors Turnover Ratio: Decreased primarily on account of decrease in average debtors during the current year due to better collections and higher factoring of steel debtors along with decrease in steel prices
2) Net Profit Margin and Return on average net worth: Decreased primarily on account of decrease in net profits mainly attributable to higher exceptional charge due to impairments which was partly offset by higher operating profits during the current year.
2. Europe Operations
Economic growth continued to decelerate globally in 2023. The rise of central bank rates to _ght inflation continued to negatively impact consumption and investments. Global GDP growth increased by 2.7% (2022: 3.1%). Infiation at 6.1% was lower than the 8.1% in 2022 but still significantly above levels seen in earlier years (2.9% in 2016-2020). In China GDP growth was 5.2% (2022: 3.0%) as economic activity increased due to the reopening of the Chinese economy in January 2023 after being shut down during the pandemic. Growth in China was held back during the year by a weak property market with house prices declining which led to issues for real estate developers.
The EU economy decelerated to 0.5% (2022: 3.5%) and the UK economy to 0.1% (2022: 4.4%). Monetary tightening and high energy costs impacted the economy. Output at the manufacturing sector was particularly low, whilst services provided more support to the economy, contrary to the post-pandemic rebound in 2021 during which manufacturing was relatively strong. Growth across the EU was uneven across the individual economies. Germany experienced a mild recession with -0.1% and France and Italy grew by 0.9% and 0.7% respectively.
Global steel demand declined in 2023 for the second year in a row by 1.1%, in line with the weak macro-economic conditions, after -3.3% decline in 2022. Demand in China decreased by 3.3% (2022: -2.9%). This decline was mainly driven by the downturn in the Chinese real estate sector. Steel demand from the manufacturing sectors continued to grow. Chinese steel demand is gradually shifting from construction to manufacturing and from long steel products to fiat steel products. Demand in the EU decreased by 10.0% (2022: -7.9%). Activity growth in the main steel-using sectors decelerated but remained slightly positive in 2023. Although construction output was negatively impacted by the high interest rates, especially for real estate, automotive output grew strongly due to backlogs.
In 2023 global steel production decreased by 0.2% to 1,848 Mt (2022: -3.3%). Steel production in China decreased by 0.4% to 1,015 Mt (2022: -1.4%) and equated to 55% of global steel production. In the EU, production decreased by 7.3% to 126 Mt (2022: -10.7%) as ~20% of blast furnaces were idled in response to lower demand for steel.
The market reference price for iron ore fines (China CFR 62%) remained relatively stable in 2023 at US$120/t (change against the previous year: -$1/t), with a low of US$105/t in May and a high of US$137/t in December. The hard coking coal spot price (Australia FOB) declined to US$296/t (change against the previous year: -$69/t). In March 2022 the price was at an all-time high of 594 US$/t due to the loss of supply from Russia as a result of the war in the Ukraine. The German benchmark scrap price (Sorte 2/8) decreased to €340/t (change against the previous year: -€74/t) compared to the previous calendar year. The price of increased in 2023 to
CO
2€84/t (change against the previous year: +€3/t), reaching an all-time high in February 2023 at €92/t. Reforms of the EU Emissions Trading System lead to a reduction in the supply of permits which cause the price to rise.
In the second half of 2023 the price declined mainly due to the weak economy reducing the demand for carbon allowances.
The European steel spot Hot Rolled Coil price (Germany, parity point) decreased in 2022 to €713/t (-€193/t).
In April 2022 the steel price was at an all-time high of €1,346/t due to the loss of supply from Ukraine and Russia. In 2023 the price was relatively low due to declining demand for steel.
In 2024 economic growth is expected to gradually accelerate in both the EU and the UK due to a lowering of the bank rates as inflation normalises. However, the high interest rates will continue to impact the economy leading to a gradual recovery. In 2024 growth of 0.8% is expected for the EU and 0.5% for the UK. Economic growth is expected to return to long-term levels pre-pandemic in 2026. Output growth in the steel-using sectors is forecast to be low in 2024 due to the tight monetary policy. A recovery in real demand is not foreseen in 2024 but a rebound of steel demand of 2.9% is expected due to restocking as the steel-using sectors start to anticipate higher demand for their products. The turnover and profit/(loss) figures of TSE are given below:
| ( H crore) | ||
| FY24 | FY23 | |
| Turnover | 78,144 | 90,300 |
| EBITDA | (7,612) | 4,632 |
| Profit before tax (PBT), before | ||
| (12,555) | 1,103 | |
| exceptional | ||
| Profit before tax (PBT) | (19,262) | 1,304 |
| Profit after tax (PAT), before exceptional | (12,896) | (3,464) |
| Profit after tax (PAT) | (19,603) | (3,263) |
The production and sales performance of TSE (continuing operations) is given below:
| (mn tonnes) | |||
| FY24 | FY23 | Change (%) | |
| Liquid Steel Production | 7.80 | 9.35 | (17) |
| Deliveries | 7.68 | 8.16 | (6) |
Production in FY2023-24 decreased by 1.55 MT (17%) compared to the previous year due to the reline of Blast Furnace 6 in the Netherlands. TSEs deliveries decreased by ~6% over the previous year due to the reline of Blast Furnace 6 in the Netherlands along with subdued demand from the market. The reduction in deliveries was less than the reduction in production due to the utilisation of stock built up in the prior year in anticipation of the Blast Furnace 6 reline.
During the year under review, the revenue stood at H78,144 crore which was lower than FY2022-23. In GBP terms, revenue decreased by 19% due to reduction in average revenue per tonne along with lower deliveries. TSE reported an EBITDA loss of H 7,612 crore during FY2023-24 lower than the EBITDA profit of H4,632 crore during FY2022-23. This significant reduction in EBITDA was seen in both TSN and TSUK. In TSN the impact of the Blast Furnace 6 reline and lower spreads within the market contributed for the decline whereas in TSUK the performance was adversely impacted by the performance of the end of life assets at the Port Talbot site as well as subdued market conditions.
Tata Steel Nederlands (‘TSN) – Liquid steel production at IJmuiden Steel Works, Netherlands during FY2023-24 at 4.81 MT was 1.52 MT lower than the previous year due to the reline of Blast Furnace 6. With completion of the repairs that were scheduled in the outage, the Blast Furnace 6 will be able to stay in production until TSN is ready to transition to a whole new way of producing steel and the newly built DRI plant is commissioned.
In October 2022, TSN submitted a request for ‘Maatwerk to enable the first phase of its decarbonisation plan, which is to be completed by 2030. An improved Green Steel Plan with an enhanced focus on reducing the impact on the environment and making TSN more circular was submitted to the Dutch Government in November 2023. The Green Steel Plan entails the closing of the largest blast furnace (blast furnace 7) and cokes and gas plant 2 and replacing them with a direct reduced iron plant and an electric arc furnace.
The Green Steel Plan is contingent on receiving ‘Maatwerk support. External advisors, engaged by the Ministry of Economic Affairs and Climate Policy to assess TSNs Green Steel Plan against alternatives viewed from the perspective and policy choices of the State. The report came out on March 28, 2024 and describes 5 scenarios. The cabinet has indicated in its letter of the same date to Parliament that it will investigate as quickly as possible if they can start discussions with TSN based upon the Green Steel Plan with accelerated reduction of nuisance.
With the continued support of Tata Steel, and the increased urgency to reduce our environmental impact, TSN is confident that in the coming year TSN will accelerate the process towards concluding a ‘Maatwerk support package. In the meantime, the process to obtain permits for the new facilities has started and TSN is actively engaging with local communities to inform on TSN plans and seek feedback.
In FY2023-24, the Roadmap Plus Program took a big step forward with completion of the dust removal installation and start of constructing the DeNOx installation, both at the Pellet Plant. The DeNOx installation aims to reduce nitrogen oxide emissions by 80% by capturing NOx compounds at the Pellet Plant.
With the Green Steel Plan, TSN is at the threshold of an important transition. To be able to a_ord that plan, it is essential to have and maintain a strong competitive position and to be agile enough to respond to rapidly changing circumstances and new developments.
In FY2023-24 an initiative that focusses on improving the operational and financial performance of Tata Steel IJmuiden was launched under the name ‘TSIJ.NU. The initiative aimed to increase throughput and utilise the full product portfolio resulting from the latest investments and the measures taken consist of improving our market position, reducing various fixed costs and working towards stable production.
In the year under review, TSN completed the upgrade of its Continuous Galvanising Line 3, that enables a more robust production of advanced (ultra) high strength steels with increased dimensional windows, and the extensive upgrade of Cold Mill 21, that allows us to manufacture grades, such as existing and future advanced and ultra-high strength steels, at significantly larger dimensional windows, improved surface quality, improved thickness performance, and a better surface inspection to improve the customer performance. Tata Steel UK (‘TSUK) – Liquid steel production at Port Talbot Steel Works, Wales during FY2023-24 at 2.99 MT was marginally lower over the previous year. During both years TSUKs primary steel making assets in Port Talbot produced significantly below their planned outputs due to operational issues with the assets which were near the end of their useful lives. These operational issues contributed to the closure of the coke ovens in March 2024 and towards a strategic review of the remainder of the heavy end assets in Port Talbot. The Drive to Save programme was developed and launched at the start of the year to focus on the cash position on the business. The programme delivered important savings with ?56m in cash improvements in first half of FY2023-24. There were a number of improvement implemented with the aim of maximising value from TSUKs downstream assets. These included the installation of the UKs largest and heaviest slitter at Hartlepool, a new welder at the Automotive Finishing Line at Llanwern which has increased gauge and coating weight capability and new drossing robots improving the zinc yield at the Zodiac Plant at Llanwern and making the operation safer for employees.
During the year a final insurance transaction between the British Steel Pension Scheme (‘BSPS) and Legal & General was completed which meant that the BSPS was fully de-risked from May 2023 onwards.
3. Tata Steel Thailand
During FY2023-24, total steel consumption in Thailand totalled 16.33 MT which decreased slightly (0.4%) in 2023 as compared to 2022. Import volume was 11.21 MT, at 69% of the demand for steel in Thailand, expanded by 4.0% y-o-y.
Demand for long product in Thailand was 6.2 MT, has remained static with a marginal increase of 0.4% y-o-y. Import volume was 2.6 MT, 42% of the demand for long product in Thailand, increased by 5.3% y-o-y. Thailands economy in 2023 fell short of initial forecasts, with a growth rate of only 1.9%, significantly lower than earlier predictions of 2.5% to 3.2%. While the tourism sector showed some recovery, weaker performance in exports, manufacturing, and private investment hindered overall growth.
Deliveries during the current year were comparatively lower on account of increased competition in rebars from induction furnace producer, higher imports of wire rods from China, higher input cost (scrap prices) and lower demand in the international market.
The turnover and profit/(loss) of Tata Steel Thailand (‘TSTH) for the Financial Year 2023-24 are as follows:
| ( H crore) | ||
| FY24 | FY23 | |
| Turnover | 5,829 | 6,992 |
| EBITDA | 44 | 239 |
| Profit before tax (PBT), before | ||
| (30) | 166 | |
| exceptional | ||
| Profit before tax (PBT) | 22 | 155 |
| Profit after tax (PAT), before exceptional | (29) | 167 |
| Profit after tax (PAT) | 23 | 156 |
The production and sales performance of TSTH is given below:
| (mn tonnes) | |||
| FY24 | FY23 | Change (%) | |
| Saleable Steel | 1.12 | 1.20 | (6) |
| Sales | 1.12 | 1.21 | (8) |
During FY2023-24 the saleable steel production decreased by 0.07 MT and sales declined by 0.09 MT over FY2022-23. The turnover decreased by H1,163 crore primarily due to sluggish demand for retail in domestic market. The profit after tax was lower by H134 crore on account of lower operating profits, offset by exceptional gain on account of disposal of Mini-blast furnace.
Year in Review
? Enhanced efficiency of scrap sourcing strategy through the development and implementation of the Scrap Reservation Application.
? Increased in volume of Use scrap to bring production cost down.
? Highest sale volume in High Value Product rebar, dowel and export sale.
Recognitions
? TSTH has been listed in SET ESG Ratings 2023 at the ‘A level which is the first year of evaluation in the form of ratings, previously known as Thailand Sustainability Investment (‘THSI) from the Stock Exchange of Thailand (‘SET).
? TSTH received Sustainability Disclosure Award for the year 2023 from Thaipat Institute.
Safety/Health/Environment
? TSMT – SCSC received ‘Thailand Labor Management Excellence Award 2023 in National Level, continued 5th year, from Department of Labor Protection & Welfare, Ministry of Labor.
? TSMT – SISCO received ‘Certificate of Carbon Footprint for Organization 2023 from Thailand Greenhouse Gas Management Organisation.
? TSMT – NTS, SCSC, SISCO received ‘Green Mining Award 2023 from Department of Primary Industries and Mines, Ministry of Industry.
4. The Siam Industrial Wire Co. Ltd. & TSN Wires Co. Ltd.
SIW serves the B2B Construction industry in Thailand and around the World with its Steel Wires for concrete reinforcement applications. TSN Wires Co. Ltd. (‘TSN Wires) serves the Fencing, Poultry, Farming, Paper and other related segments with its Galvanized Wires. The Siam Industrial Wire Company Ltd (‘SIW) is a downstream Steel Wire manufacturer for use in various concrete reinforcement applications. It manufactures PC Strand, PC Wire, Wire Mesh and Cold Drawn wires mainly for the construction segment in Public infrastructure projects and Private sector (Housing, Factory, Building
280 etc.). SIWs factory is based in Rayong, Thailand and it is a leader in its industry with 34% market share (for PC Strand and PC Wire) in Thailand and it also has a strong export presence across key continents such as Europe, ASEAN, America and Oceania.
TSN Wires is in the business of manufacturing Galvanized Wires and is based out of Rayong, Thailand and is a 60% subsidiary of SIW. TSN Wires serves the Fencing, Poultry, Farming, Paper and other related segments with its Galvanized Wires for various end use applications. Thailand steel demand has been impacted from the delay of new Government formation in H1FY2023-24 and because of the postponement of the national Budget until April/May 2024. Consequently, demand from Government projects which are key demand drivers for sales of PC Products has been absent and on the other hand the private sector also continued to struggle due to lack of demand. In summary, both SIW and TSN Wires got challenged from these two key factors: (1) Demand Slowdown in Thailand, EU and US and (2) Severe high competition and price dumping from Chinese competitors.
The turnover and profit/(loss) of SIW for the Financial Year 2023-24 are as follows:
| ( H crore) | ||
| FY24 | FY23 | |
| Turnover | 1,416 | 1,930 |
| EBITDA | 67 | 235 |
| Profit before tax (PBT) | 41 | 190 |
| Profit after tax (PAT) | 29 | 159 |
The production and sales performance of SIW is given below:
| (mn tonnes) | |||
| FY24 | FY23 | Change (%) | |
| Saleable Steel | 0.20 | 0.20 | 3 |
| Sales | 0.21 | 0.22 | (2) |
The turnover and profit/(loss) of TSN Wires for the Financial Year 2023-24 are as follows:
| ( H crore) | ||
| FY24 | FY23 | |
| Turnover | 251 | 267 |
| EBITDA | (1) | 0 |
| Profit before tax (PBT) | (17) | (14) |
| Profit after tax (PAT) | (17) | (14) |
The production and sales performance of TSN Wires is given below:
| (mn tonnes) | |||
| FY24 | FY23 | Change (%) | |
| Saleable Steel | 0.03 | 0.03 | (1) |
| Sales | 0.03 | 0.03 | - |
During FY2023-24, the combined saleable steel production (SIW & TSN Wires) decreased marginally by 2% due to subdued demand, whereas the deliveries were at par. The combined turnover decreased by 24% due to decline in prices. Profits declined in line with decrease in prices.
Recognitions
National Level
? SIW Received the certificate ‘Thailand Trust Mark. ? SIW Received a certificate of ‘Low Emission Support Scheme (‘LESS) from the Thailand Greenhouse Gas Management Organisation (‘TGO) on renewable energy project for completing Renewable energy project.
? SIW Received the ‘Green Industry Level 4 (‘GI-4) from the Department of Industrial Works, Ministry of Industry, Thailand. GI-4 is the organisations determination to proceed continuously in a sustainable environment.
? SIW Received Corporate Social Responsibility Continuous Award (CSR – DIW Continuous Award). The award is for the 15th consecutive year (2009-2023) from the Department of Industrial Works, Ministry of Industry, Thailand.
Overseas Level
? SIW: Received the first Environmental Product
Declaration certification for construction wires outside of Europe and Achieved the Lowest Carbon Emission in Thailand Construction Wire.
5. Tata Steel Minerals Canada
Tata Steel Minerals Canada (‘TSMC) is a partnership between Tata Steel (82%) and the Government of Quebec (18%). TSMC mines and processes high-grade iron ore is from its multiple isolated hematite deposits occurring over 30 km in the Menihek region of Labrador and northern Quebec, near Sche_erville, and containing from <1 million to 50 million tonnes of high-grade ore. Fines for sintering and superfine material from its beneficiation plant are produced with a minimum iron content of 64% Fe while the Direct Shipping Ore (‘DSO) facilities crush, screen and dry 60%-62% Fe iron ore for direct shipping. The product is railed to Sept-Iles (a city in Canada) for shipping to the customers worldwide. In FY2023-24, the business was able to produce ~2 MT of iron ore fines and complete total shipment of 1.94 MT. During this period, total revenues from such sales was U$157 mn against the plan of U$ 154 mn due to steady iron ore prices. TSMC achieved 100% compliance for %Fe and %Silica in its products resulting in zero quality penalties. Further, premiums were obtained on some product offerings (lumps @U$14/ton) in F2023-24 from merchant shipments to China.
The turnover and profit/(loss) figures for the Financial Year 2023-24 are as follows:
| ( H crore) | ||
| FY24 | FY23 | |
| Turnover | 1,330 | 649 |
| Profit before tax (PBT) | (771) | (1,086) |
| Profit after tax (PAT) | (771) | (1,086) |
During FY2023-24, the turnover more than doubled to H1,330 crore which was significantly higher over previous year by H681 crore (105%) owing to higher volumes and prices. FY2023-24 reported a lower loss before tax amounting to H 771 crore as against loss of H 1,086 crore in previous year primarily on account of higher operating profits which was partly offset by higher finance cost during the year.
Consolidated Performance
The consolidated profit after tax of the Company was (H4,910 crore) as against H8,075 crore in the previous year. The decrease was due to lower operating profits on subdued performance from the European operations due to contraction in steel prices and lower deliveries. EBITDA however, improved in the Indian operations primarily on account of higher deliveries along with decrease in input costs, which was partly offset by lower steel realisations in India. Moreover, there were higher charges under exceptional items of H7,814 crore majorly due to the impairment of Property, Plant and Equipment at TSUK for heavy-end restructuring along with provision for redundancy and restructuring costs. Higher net finance charges by H 1,136 crore mainly at European operations owing to additional loans taken during the year. Tax charge was lower by H6,397 crore in line with lower profitability. The basic and diluted earnings for FY2023-24 were at loss of H 3.62 per share each (previous year: basic and diluted: H 7.17 per share each).
The analysis of major items of the financial statements is given below.
a) Revenue from operations
| ( H crore) | |||
| FY24 | FY23 | Change (%) | |
| Tata Steel (Standalone) | 140,987 | 142,913 | (1) |
| TSE | 78,144 | 90,300 | (13) |
| NINL | 5,505 | 1,646 | 235 |
| South East Asia | 7,495 | 9,189 | (18) |
| Others | 69,787 | 85,566 | (18) |
| Eliminations & Adjustments | (72,747) | (86,261) | 16 |
Total revenue from |
|||
| 229,171 | 243,353 | (6) | |
operations |
The consolidated revenue from operations was lower by 6% as compared to the previous year on account of decrease in steel realisations across geographies along with lower deliveries at the European operations. Revenue declined at Europe attributable to decrease in deliveries due to the reline of Blast Furnace 6 in the Netherlands along with subdued market demand and decrease in average revenue per tonne.
Revenue declined at Tata Steel Standalone primarily on account of decrease in realisations, partly offset by increase in deliveries aided by sale of traded products from NINL. Increase at NINL was due to higher production during the year which was eliminated on consolidation. Others primarily include decrease at TS Global Procurement Company Pte. Ltd. which are majorly eliminated on consolidation.
b) Purchases of stock-in-trade
| ( H crore) | |||
| FY24 | FY23 | Change (%) | |
| Tata Steel (Standalone) | 9,702 | 7,424 | 31 |
| TSE | 5,518 | 3,428 | 61 |
| NINL | - | - | N.A. |
| South East Asia | 3,724 | 4,616 | (19) |
| Others | 7,320 | 7,437 | (2) |
| Eliminations & Adjustments | (11,291) | (7,791) | (45) |
Total purchases of stock- |
|||
| 14,973 | 15,114 | (1) | |
in-trade |
Expense was lower mainly at South East Asia (‘SEA) due to decrease in billet production at TSTH. Expenses increased at Europe mainly due to increase in external steel purchases due to reline of Blast Furnace 6 in the Netherlands. Increase at Tata Steel (Standalone) attributable to increase in purchases of traded rebars from NINL, which was majorly eliminated on consolidation.
c) Cost of materials consumed
| FY24 | FY23 | Change (%) | |
| Tata Steel (Standalone) | 48,018 | 59,949 | (20) |
| Europe | 30,200 | 38,982 | (23) |
| NINL | 3,106 | 1,502 | 107 |
| South East Asia | 1,525 | 1,795 | (15) |
| Others | 57,141 | 74,424 | (23) |
| Eliminations & Adjustments | (57,456) | (75,169) | 24 |
Total cost of materials |
|||
| 82,534 | 101,483 | (19) | |
consumed |
Consumption declined across all major entities mainly due to lower cost of consumption of imported coal and other raw materials owing to lower prices. Europe reported decrease in GBP terms primarily due to lower coal and coke prices along with lower production due to the reline of Blast Furnace 6 in the Netherlands. Decrease at Tata Steel Standalone was mainly due to decrease in prices of coking coal and lower cost of purchased pellet, post commencement of pellet plant at Kalinganagar during the year, partly offset by higher consumption due to higher production. Raw material consumption increased at NINL due to increased production during the year.
Others primarily reflects decrease in transactions at TS Global Procurement Company Pte. Ltd. due to decrease in coal prices, which are majorly eliminated on consolidation.
d) Employee benefits expense
| ( H crore) | |||
| FY24 | FY23 | Change (%) | |
| Tata Steel (Standalone) | 7,402 | 7,221 | 3 |
| Europe | 15,576 | 13,687 | 14 |
| NINL | 225 | 173 | 30 |
| South East Asia | 325 | 318 | 2 |
| Others | 912 | 873 | 4 |
| Eliminations & Adjustments | 70 | 147 | (53) |
Total employee benefits |
|||
| 24,510 | 22,419 | 9 | |
expense |
Increase in expenses was mainly at TSE primarily due to BSPS movement in UK post buy-in and actuarial movement in Netherlands. Adverse exchange impact on translation further increased the charge.
Increase in expenses at Tata Steel (Standalone) was mainly due to salary revisions and its consequential impact on retirement provisions along with increase in leave salary and staff welfare expenses. Increase at NINL was attributable to full year of operation during the year.
e) Depreciation and amortisation expense
| ( H crore) | |||
| FY24 | FY23 | Change (%) | |
| Tata Steel (Standalone) | 5,970 | 5,956 | - |
| Europe | 2,818 | 2,387 | 18 |
| NINL | 496 | 368 | 35 |
| South East Asia | 97 | 92 | 5 |
| Others | 617 | 621 | (1) |
| Eliminations & Adjustments | (116) | (89) | (30) |
Total depreciation and |
|||
| 9,882 | 9,335 | 6 | |
amortisation expense |
Expense was higher than the previous year mainly on account of increase in depreciation charge at Europe due to additions along with adverse exchange rate movement. Increase at NINL due to full year of operations during the year.
f) Other expenses
| FY24 | FY23 | Change (%) | |
| Tata Steel (Standalone) | 45,661 | 41,379 | 10 |
| Europe | 30,852 | 30,958 | - |
| NINL | 1,854 | 1,087 | 71 |
| South East Asia | 1,647 | 1,831 | (10) |
| Others | 3,815 | 3,011 | 27 |
| Eliminations & Adjustments | (3,389) | (2,871) | 18 |
Total other expenses |
80,440 | 75,395 | 7 |
Other expenditure represents the following expenditure:
( H crore) |
|||||
| FY24 | FY23 | Change (%) |
|||
Consumption of stores and |
|||||
| 18,741 | 18,041 | 4 |
|||
spares |
|||||
Repairs to buildings |
71 | 90 | (21) |
||
Repairs to machinery |
12,268 | 11,584 | 6 |
||
Relining expenses |
329 | 339 | (3) |
||
Fuel oil consumed |
1,537 | 1,467 | 5 |
||
Purchase of power |
8,535 | 8,060 | 6 |
||
Conversion charges |
2,854 | 3,092 | (8) |
||
FY24 |
FY23 |
Change (%) | |||
| Freight and handling | |||||
12,931 |
12,648 |
2 | |||
| charges | |||||
| Rent | 3,700 |
2,923 |
27 | ||
| Royalty | 6,764 |
6,924 |
(2) | ||
| Rates and taxes | 2,740 |
1,971 |
39 | ||
| Insurance charges | 712 |
696 |
2 | ||
| Commission, discounts and | |||||
309 |
357 |
(13) | |||
| rebates | |||||
| Allowance for credit losses/ | |||||
114 |
10 |
998 | |||
| provision for advances | |||||
| Other expenses | 10,750 |
8,883 |
21 | ||
| Less :-Expenditure (other | |||||
| than interest) transferred to | (1,915) |
(1,690) |
13 | ||
| capital & other accounts | |||||
Total Other expenses |
80,440 |
75,395 |
7 | ||
Expenses increased at Tata Steel (Standalone) primarily due to lower foreign exchange revaluation gain on inter-company loans/receivables. Increase in rates and taxes on account of higher charges for District Mineral Fund and reversal of entry tax provision in last year. Moreover, there was increase in other general expenses mainly in travelling, Brand equity, CSR and others. Expenses at Europe were at par as the decrease on account of lower activities was almost offset by adverse exchange rate movement on conversion.
Expenses increased at NINL mainly due to full year of operation during the year.
Decrease at South East Asia due to decrease in power tariffs and lower gas prices along with lower production. Increase in Others was mainly at Tata Steel Minerals Canada Limited due to higher production and deliveries along with increase at other Indian subsidiaries.
g) Finance costs
| FY24 | FY23 | Change (%) | |
| Tata Steel (Standalone) | 4,179 | 3,975 | 5 |
| Europe | 2,343 | 1,296 | 81 |
| NINL | 567 | 385 | 47 |
| South East Asia | 15 | 15 | 2 |
| Others | 5,640 | 5,396 | 5 |
| Eliminations & Adjustments | (5,236) | (4,768) | 10 |
Finance costs |
7,508 | 6,299 | 19 |
h) Net Finance costs
| FY24 | FY23 | Change (%) | |
| Tata Steel (Standalone) | 2,227 | 1,926 | 16 |
| Europe | 2,169 | 1,166 | 86 |
| NINL | 537 | 370 | 45 |
| South East Asia | 2 | 3 | (28) |
| Others | 1,926 | 2,204 | (13) |
| Eliminations & Adjustments | (67) | (10) | 542 |
Net Finance costs |
6,794 | 5,659 | 20 |
Finance cost increased by 19% primarily at Tata Steel Europe mainly on account of utilisation of external borrowings during the year attributable to subdued performance. There was higher interest on domestic term loans owing to fresh utilisation during the current financial year for capital expansion projects, partly offset by lower interest on short-term borrowings, commercial papers and debentures attributable to lower balances during the year.
Increase at NINL was due to full year of operation during the year, eliminated on consolidation. Increase in Others was mainly at foreign subsidiaries, eliminated on consolidation.
Net finance charge was higher in line with higher finance cost due to increase in borrowings over the period.
i) Exceptional items
| FY24 | FY23 | Change (%) | |
| Tata Steel (Standalone) | (13,636) | (780) | N.A. |
| Europe | (6,707) | 201 | N.A. |
| NINL | (31) | 0 | N.A. |
| South East Asia | 52 | (48) | N.A. |
| Others | 0 | 0 | N.A. |
| Eliminations & Adjustments | 12,508 | 740 | N.A. |
Total exceptional items |
(7,814) | 113 | N.A. |
Exceptional items during FY2023-24 primarily represents: ? Provision for impairment of non-current assets H3,516 crore, which primarily includes impairment of
Property, Plant and Equipment, intangibles (including capital work-in-progress) at TSE due to heavy end restructuring along with impairment for Sukinda mines and impairment of port project in India.
? Net Provision for ESS amounting to H130 crore under
SBKY Scheme and other scheme at Tata Steel Limited (Standalone) and at NINL.
? Charge of H4,263 crore under restructuring and other provisions mainly at Europe and at Tata Steel Limited (Standalone) for Sukinda mines.
Partly offset by,
? Gain on sale of non-current investments in an associate at TSE amounting to H5 crore.
? Gain on sale of non-current assets at TSTH amounting to H52 crore on disposal of Mini Blast Furnace asset. ? Impairment reversal of H20 crore at Europe on deferred consideration of Speciality Business. ? Fair valuation gain on non-current investments amounting to H18 crore at Tata Steel Limited
(Standalone).
The exceptional items in FY2022-23 primarily represents: ? Gain on sale of non-current investments at TSE amounting to H67 crore.
? Impairment reversal of H96 crore at Europe on deferred consideration of Speciality Business. ? Net impairment reversal in respect of PPE (including capital work-in-progress), right-of-use assets and other assets at Europe of H37 crore.
? Fair valuation gain on non-current investments amounting to H31 crore at Tata Steel Limited
(Standalone). Partly offset by,
? Net Provision for ESS amounting to H92 crore under
SBKY Scheme at Tata Steel Limited (Standalone). ? Expenses incurred in stamp duty and registration fees for a portion of land parcels and mines acquired as part of business combination amounting to H2 crore at erstwhile TSLP.
? Impairment of Mini Blast Furnace at TSTH amounting to H11 crore.
? Net impairment charge of H12 crore on ICD and investments in one of the associates at Tata Steel Limited (Standalone).
j) Property, Plant and Equipment (PPE) including intangibles and right-of-use assets
| H | |||
| FY24 | FY23 | Change (%) | |
| Tata Steel (Standalone) | 125,178 | 119,592 | 5 |
| Europe | 31,244 | 31,048 | 1 |
| NINL | 11,366 | 11,558 | (2) |
| South East Asia | 964 | 1,029 | (6) |
| Others | 10,252 | 10,055 | 2 |
| Eliminations & Adjustments | (1,554) | (1,043) | (49) |
Total PPE inlcuding |
|||
intangibles & right-of- |
177,450 | 172,239 | 3 |
use assets |
PPE including intangibles and right-of-use assets increased by 3% primarily at Tata Steel India on account of increase in capital work-in-progress mainly at Kalinganagar Phase-II and normal additions at Kalinganagar plant during the year, which was offset by depreciation and amortisation charge during the year. Europe was at par, as the additions in plant and machinery during the year was offset by impairment charge along with depreciation and amortisation charge during the year.
k) Inventories
| FY24 | FY23 |
Change (%) |
|||
| Finished and semi-finished | |||||
| goods including stock in | 16,830 | 17,488 |
(4) |
||
| Trade | |||||
| Work-in-progress | 5,692 | 9,439 |
(40) |
||
| Raw materials | 19,703 | 20,795 |
(5) |
||
| Stores and spares | 6,933 | 6,693 |
4 |
||
Total Inventories |
49,158 | 54,415 |
(10) |
||
FY24 |
FY23 |
Change (%) | |||
| Tata Steel (Standalone) | 24,547 |
25,420 |
(3) | ||
| Europe | 20,696 |
25,226 |
(18) | ||
| NINL | 1,151 |
971 |
19 | ||
| South East Asia | 920 |
1,200 |
(23) | ||
| Others | 2,021 |
1,704 |
19 | ||
| Eliminations & Adjustments | (177) |
(106) |
(67) | ||
Inventories |
49,158 |
54,415 |
(10) | ||
Decreased by 10% primarily at Europe mainly at Ijmuiden on account of utilisation of stock built up at the start of FY2023-24 for extended outage for the Blast Furnace 6 reline during the year. Decrease at Tata Steel Limited Standalone mainly on account of decrease in quantities and rates of finished and semi-finished inventory owing to higher deliveries. Raw material inventory decreased due to decrease in the prices of imported coking coal and thermal coal during the year, partly offset by higher quantity of coking coal. Decrease in SEA was primarily due to lower stock quantities of scrap and billets on account of lower production.
Increase at NINL was primarily on account of higher coal and coke inventory.
l) Trade receivables
| ( H crore) | |||
| FY24 | FY23 | Change (%) | |
| Tata Steel (Standalone) | 1,606 | 2,562 | (37) |
| Europe | 3,895 | 4,782 | (19) |
| NINL | 102 | 126 | (19) |
| South East Asia | 833 | 1,017 | (18) |
| Others | 9,334 | 9,938 | (6) |
| Eliminations & Adjustments | (9,506) | (10,168) | 7 |
Net trade receivables |
6,264 | 8,257 | (24) |
Decrease was primarily at Tata Steel Limited Standalone due to better collections and higher factoring of steel debtors along with decrease in steel prices. Decrease at Europe mainly due to sharp decline in steel prices during the year. Decreased at SEA mainly due to lower sales and fall in steel prices. Decrease in Others was primarily at Tata Steel Global Procurement majorly eliminated on consolidation.
m) Gross debt and Net debt
| FY24 | FY23 | Change (%) | |
| Gross debt | 87,082 | 84,893 | 3 |
| Less: Cash and Bank | |||
| balances (incl. Non-current | 8,801 | 13,453 | (35) |
| balances) | |||
| Less: Current investments | 731 | 3,630 | (80) |
Net debt |
77,550 | 67,810 | 14 |
Net debt was higher by H9,740 crore over previous year. Gross Debt at H87,082 crore was higher by H2,189 crore as compared to the previous year. The increase in Gross Debt was mainly due to net borrowings of H1,230 crore
mainly in term loans primarily at Tata Steel Limited Standalone for funding capital expansion projects. The increase was further impacted by adverse exchange rate movements on the borrowings.
The increase in Net Debt was in line with increase in gross debt along with significant decrease in cash and cash equivalents mainly at Europe due to subdued performance owing to lower activities for reline of Blast Furnace 6 in the Netherlands, and at SIW post dividend payment. Current investments declined mainly in India, offset by increase in cash and cash equivalents.
n) Cash Flows
| ( H crore) | |||
| FY24 | FY23 | Change (%) | |
| Net Cash from/(used in) | |||
| 20,301 | 21,683 | (6) | |
| operating activities | |||
| Net Cash from/(used in) | |||
| (14,252) | (18,679) | 24 | |
| investing activities | |||
| Net Cash from/(used in) | |||
| (11,097) | (6,981) | (59) | |
| financing activities | |||
Net increase/(decrease) |
|||
in cash and cash |
(5,048) | (3,977) | (27) |
equivalents |
Net cash flow from/(used in) operating activities
During the year under review, the net cash from operating activities was H20,301 crore as compared to H21,683 crore during the previous year. The cash inflow from operating profit before working capital changes and direct taxes during the current year was H22,237 crore as against
H30,908 crore during the previous year reflecting decline in operating profits during the current year. Cash inflow from working capital changes during the current period was H3,384 crore primarily due to decrease in inventory by H5,566 crore, decrease in current/non-current financial assets by H2,599 crore, partly offset by, decrease in Non-current/current financial and other liabilities/ provisions by H4,781 crore. The payments of income taxes during the year under review were H5,320 crore as compared to H 5,519 crore during the previous year mainly at Tata Steel Standalone.
Net cash flow from/(used in) investing activities
During the year under review, the net cash outflow from investing activities was H14,252 crore as against an outflow of H18,679 crore during the previous year. The outflow during the year broadly represents capex of H18,207 crore primarily at India and at Europe. O_set by sale (net of purchase) of current investments amounting to H3,141 crore. Inflow on account of interest and dividend receipt H669 crore.
Net cash flow from/(used in) financing activities
During the year under review, net cash outflow from financing activities amounted to H11,097 crore as against outflow of H6,981 crore during the previous year. The net outflow primarily represents payment of dividend of H4,429 crore and interest payment of H8,145 crore partly offset by proceeds from borrowings (net of repayments including finance lease) of H1,230 crore.
o) Changes in Key Financial Ratios
The change in the key financial ratios as compared to previous year is stated below:
| FY24 | FY23 | Change (%) | |
| Inventory Turnover (days) | 84 | 79 | 6 |
| Debtors Turnover (days) | 12 | 15 | (20) |
| Current Ratio (Times) | 0.87 | 1.01 | (14) |
| Interest Coverage Ratio1 | |||
| 2.47 | 6.01 | (59) | |
| (Times) | |||
| Debt Equity (Times) | 0.88 | 0.76 | 15 |
| Net Debt Equity2 (Times) | 0.78 | 0.61 | 29 |
| EBITDA Margin3 (%) | 10.21 | 13.44 | (24) |
| Net Profit Margin4 (%) | (2.14) | 3.32 | (165) |
| Return on average Net | |||
| (4.97) | 7.27 | (168) | |
| worth4 (%) |
1) Interest Coverage Ratio: Decreased primarily on account of decline in operating profits along with higher finance cost due to increase in borrowings.
2) Net Debt to Equity: Increased due to increase in Net Debt attributable to decrease in cash and cash equivalents majorly at European operations along with loss during the period resulting in decrease in average equity.
3) EBITDA Margin: Decreased primarily on account of lower operating profits majorly at European operations primarily due to contraction in steel prices and lower deliveries.
4) Net Profit Margin and Return on average net worth: Decreased primarily on account of loss during the year mainly attributable to lower operating profits, higher exceptional charge for restructuring and higher net finance charge.
VII.Corporate Finance
In 2024, the International Monetary Fund expects Global GDP growth to be at 3.1% y-o-y and inflation to moderate from 8.8% in 2022 to 4.3%. Global central banks have been focused on inflation and as policy transmission sustained, it has reflected in the inflation trajectory across key regions. Looking ahead to 2025, the Global GDP is expected to witness a marginal increase to 3.2% y-o-y. Global outlook for 2024–25 reflects better prospects for developed economies including U.S. even as developing economies like India remain resilient. China continues to be a key watchpoint, with its heavily indebted real estate market weighing on economic recovery. China Government has fixed its offcial growth target at around 5% and has also pledged to create 12 million jobs amidst growing concerns over rising unemployment.
Overall, the chances of a hard landing for global economy have diminished due to disinflation and steady growth in select regions. As a result, risks to global growth are also broadly balanced. For instance, on the upside, expansive fiscal policy and continued disinflation can boost growth but raise the risk of a more costly adjustment later on. Conversely, commodity price spikes due to geopolitical issues such as Red Sea attacks may result in persistent inflation and lead to prolonged tighter monetary policy. Hence, in the near term, global policymakers focus will be on effectively managing inflation while promoting growth.
In India, The Reserve Bank of India (‘RBI) expects GDP to grow close to 8% y-o-y in 2024, higher than 7.2% y-o-y recorded in 2023. Domestic economic activity has been aided by Government spending, household consumption, rise in manufacturing activity and services sector. These factors along with healthy corporate and bank balance sheets and rising integration with global supply chains are likely to aid growth in the near term. In 2025, India GDP is expected to expand by 7.4% y-o-y and Consumer Price Index (‘CPI) is likely to moderate from 5.4% in 2024 to 4.5% levels. Infiation trajectory to be shaped by evolving food inflation, state of supply chains and global commodity prices especially oil.
Financial Markets:
Global financial markets have continued to remain volatile and uncertain due to inflation – rate hike dynamics. In the U.S., sharp rise in interest rates, since February 2022, have led to a situation where short-term U.S. Treasury yields have surpassed those of longer-term U.S. Treasury bonds, creating an inverted yield curve. Moreover, persistent inflation and the ongoing rate hikes by the U.S. Federal Reserve have continued to weigh on the global credit market, culminating in benchmark rates for U.S. Treasuries reaching their highest levels in 16 years (by October 2023). Since then, slight decline in the CPI and signs of a cooling labour market in the U.S. have led to improved sentiment.
In India, financial markets have witnessed improvement and remained resilient despite global uncertainties and geopolitical tensions. RBI maintained its repo rate throughout the year while investors witnessed a remarkable ascent, with the Nifty 50 and BSE Sensex scaling new heights. Nifty attained a record peak of 22,097 points on January 15, 2024, registering a 27% increase for the year. Sensex also reached an all-time high of 73,328 points on the same day, emphasising the broader market strength. Overall, the Nifty 50 and BSE Sensex have witnessed gains of around 25%, positioning this year as one of the most successful in recent times. The movement was visible across broad sectors including steel. Tata Steel share price has increased from around 107 per share levels in early March 2023 to around 157 per share in March 2024, reaching an all-time high and surpassing the previous best recorded nearly three years ago. Moving to yields, the 10-year Government securities (G-secs) have remained relatively stable within a certain range during the financial year. In February 2024, the yield on the 10-year benchmark G-sec fell by ~10 basis points following the announcement of a reduced fiscal deficit in the interim union budget. The anticipated decrease in total Government borrowing and the expected inclusion of G-Secs in major global bond indices by 2025, indicates that the Government might be able to secure funding at lower costs from the market and this augurs well for the broader market sentiment.
Central Banks and Monetary Policy:
The International Monetary Fund (‘IMF) expects global inflation to fall from 6.8% in 2023 to 5.8% in 2024 and 4.4% in 2025. Developed economies are expected to see faster disinflation than emerging market and developing economies. While factors vary, disinflation is primarily expected to be driven by softening labour markets, food inflation and energy prices. In the U.S., Federal Reserve had raised rates in July 2023 by 0.25% to 5.25% – 5.50% and since then, it has kept rates unchanged despite concerns about banking industry, persistent inflation, and robust job numbers. While US Federal Reserve continues to remain cautious, it has steadily pivoted to rate cuts in 2024. The Federal Open Market Committee appears to have transitioned from a stringent to a more accommodating stance and in its December 2023 meeting, signalled three quarter-point rate cuts by the end of 2024 to lower the fed fund rates to 4.6%. As of now, U.S. Federal Reserves projections suggest that Personal Consumption Expenditure inflation will settle at 2.5% in 2024 and ease to 2.2% in 2025.
In the same vein, Eurozone consumer price inflation has also declined from 9.2% in February 2023 to 2.6% in March 2024. In the United Kingdom, consumer price inflation including housing costs has decreased from 9.2% in February 2023 to 3.8% in February 2024. With inflation rates moderating across key regions, the European Central Bank witnessed peak interest rate of 4.5% in September 2023 following its tenth increase since July 2022, while the Bank of England witnessed its peak of 5.25% in August 2023. Since then, central banks have maintained rates, anticipating that the effects of the rate hikes implemented throughout 2023 will sustain progress with respect to inflation dynamics.
In India, RBI maintained the policy repo rate at 6.5%, unchanged during the financial year (FY2023-24). The last increase was in February 2023. RBI continues to remain focused on maintaining CPI inflation at 4% in the medium-term, with a tolerance range of plus or minus 2%, while also promoting economic growth.
Financing:
Tata Steel triangulates its capital allocation between deleveraging, return to shareholders and growth capex to provide optimal returns to the shareholders and our strategy is calibrated to evolving operating cycles. For instance, in FY2020-21 and FY2021-22, Tata Steel successfully deleveraged our gross debt by H40,767 crore and this was much higher than the Companys annual deleveraging target of $1 billion. During these years, the focus was on strengthening the balance sheet of the Company and positioning to aid future growth. Subsequently, in FY2022-23 and FY2023-24, Tata Steel has prioritised growth capital expenditure especially for Kalinganagar. This along with volatile operating environment that led to higher working capital requirements and outflows for acquistion of NINL and dividend have meant that our gross debt increased from H75,561 crore in FY2021-22 to around H88,230 crore in FY2023-24. On an annual basis, gross debt has witnessed only a marginal increase between FY2022-23 to FY2023-24 despite the volatile operating environment. The phased commissioning of 2.2 MTPA Cold Rolling mill complex and operations of pellet plant in Kalinganagar have already begun during 2024. The Company looks forward to commissioning of 5 MTPA blast furnace which is expected to aid cashflows as well as credit metrices. Tata Steel remain focused on cost optimisation and working capital. Tata Steel is happy to share that there has been significant progress on our portfolio simpli_cation exercise in India. As stated, the Company have successfully amalgamated five listed and unlisted subsidiaries after duly completing the regulatory processes and the integration is underway. The five companies had a cumulative turnover of around 19,700 crore in FY2022-23. The amalgamation is value accretive and will also drive synergies through raw material security, centralised procurement, optimisation of inventories, reduced logistics costs, and better facility utilisation. For three other companies - Bhubaneswar Power Private Limited (wholly-owned subsidiary of Tata Steel), Angul Energy Limited (Tata Steel shareholding - 99.99%) and The Indian Steel and Wire Products Limited (Tata Steel shareholding - 98.61% as on the date of this report), the merger process is at advanced stages with the respective jurisdictional National Company Law Tribunals and is expected to be completed by Q1FY2024-25, subject to regulatory approvals.
Credit Ratings:
Partway through the year, international rating agency Moodys upgraded Tata Steel Limiteds corporate family rating from ‘Ba1 to ‘Baa3. The rating outlook was also changed from ‘Positive to ‘Stable citing Tata Steels consistent operational performance and prudent financial strategies. Separately, S&P Global Ratings reiterated its ‘BBB- corporate family rating for Tata Steel while maintaining a ‘Positive rating outlook. With this, Tata Steel becomes the only steel company in India to be rated Investment grade by both the international credit rating agencies. Domestic credit rating agencies, India Ratings and CARE Ratings have also reafirmed Tata Steels long-term credit rating at ‘AA+.
VIII. Risks and Concerns
Tata Steel operates in an interconnected world with stringent regulatory and environment requirements, increased geopolitical risk and fast pace technological disruptions that could have a material impact across the value chain of the organisation. Tata Steel has implemented a Enterprise Risk Management (‘ERM) process to provide a holistic view of the aggregated risk exposure as well as to facilitate more informed decision-making.
In its journey towards Risk Intelligence, a robust governance structure has been developed across the organisation. The Board of Directors has constituted a Committee of the Board called the Risk Management Committee. At senior management level, an Apex Risk Committee (‘ARC) has been constituted to drive the ERM process across Tata Steel Group.
Information regarding Key Risk facing Tata Steel and their mitigation strategies is given below:
Financial Risk
Tata Steel aspires to double its capacity in India in a sustainable manner to capitalise on Indias growth opportunity. The capacity growth is aimed to aid continued strong presence across segments focused on sectors leading high returns.
Additionally, Tata Steel UK will initiate the transitioning to EAF in 2024, and TSN is also planning to undergo decarbonisation in next few years. Access to finance will be required to enable Tata Steels journey to a low carbon future with potential capital investments and significant transition and decommissioning costs.
Tata Steel has H77,550 crore of net debt as on March 31, 2024. The Company plans to deleverage and fund the growth through internal accruals and raising external capital from banks and capital markets. The cost of borrowings may be affected due to changing sentiments of the global financial market.
Also, climate change and sustainability will continue to take centre stage with rising stakeholder expectations having implications on cost and availability of capital. Strengthening ESG guidelines and disclosure standards are likely to weigh in accessing overseas finance, which may lead to increase in funding cost.
The financialisation of commodities and growing geopolitical conflicts may heighten market volatility, notably impacting raw material prices and may lead to escalations in the cost of hot metal and increased working capital requirements. Volatility in financial markets may lead to depreciation of INR against USD which will further impact cost of capital.
Mitigation Strategies
Tata Steel is focused on cash flow generation and debt reduction for mitigating the risks. The objective is to balance between growth and deleveraging with a focus on returns to shareholders. The Company is strategically diversifying its sources of capital including grants from Government to transition to greener operations. The Company also strives to access various pools of capital and actively pursue opportunities to secure longer term debt with flexible terms. The Company has prioritised projects with higher value accreditation (ROIC: 15%) and short payback periods in its capital allocation strategy. Additionally, Tata Steel is actively engaged in portfolio restructuring to optimise our holdings, striving for operational excellence by reducing working capital and actively participating in continuous improvement programs.
Tata Steel is committed to collaborating with international bodies like the Task Force on Climate-Related Financial Disclosures (‘TCFD) to improve ESG disclosures, adhere to evolving standards, and establish a sustainable financing framework. Tata Steel plans on increasing capital flows by exploring sustainable financing options such as green bonds. The Company also intends to actively communicate with investors to address any doubts regarding the credibility of green labelling and to ensure that funds are used in a certified and independent manner.
Tata Steel has also implemented the concept of ‘One Treasury, which efficiently manages the treasury operations for the entire Tata Steel Group including its Subsidiaries. This comprehensive approach, combined with skillful management of cashflows, currencies and commodity hedging, effectively reduces the impact of price fluctuations, and delivers better financial stability in a dynamic market environment.
Macroeconomic and Market Risk
Slowdown of growth in China resulted in higher exports which weighed on the international and Indian steel prices. While Indias steel manufacturers rode on a strong double-digit demand in 2023, increase in imports in Indian market has resulted in excess supply of cheaper material and impacted the prices.
TSN and Tata Steel UK, along with other European steel producers, are being squeezed between rising import pressures and a long-term decline in demand.
Fast paced technological changes and shifting customer preferences may necessitate adoption of newer grades of steel and/or alternate materials.
Mitigation Strategies
In India, as Tata Steel sales are predominantly focused on the domestic market, the Company targets the price volatility by adjusting its sales mix geographically and across different segments. To mitigate the risk of cyclicality, long-term contracts are entered into with discerning customers (especially automotive segment) and by offering solutions.
Tata Steel has invested in building a strong marketing franchise with well-regarded brands and a large network of distributors, dealers, and stocking points across the country. Dedicated marketing and sales teams have nurtured strong customer relationships through tailored solutions, enhanced reliability, and value-added products.
The Company has specifically focused on green steel offerings in Netherlands and UK.
The European Union is developing the Carbon Border Adjustment Mechanism (‘CBAM) to put a fair price on the carbon emitted during the production of carbon-intensive goods. A similar fair price mechanism is expected to be rolled out for the UK as well. Tata Steel operations in the Netherlands and UK recognise the importance of CBAM in ensuring a level playing field to manage the risk of cheap imports.
The introduction of green certified/sustainable products and diversifying our product offerings beyond steel with new materials such as Composites, Fiber Reinforced Products, etc., helps meet the unique requirements of our discerning customers.
Regulatory Risk
The regulatory landscape in global metals and mining industry is becoming stringent due to geopolitical conditions, changing trade patterns, tari_, protectionist policies, enhanced focus on ESG. Non-adherence to such stringent regulatory ecosystem may impact business operations and reputation.
Both Tata Steel Netherlands & Tata Steel UK are subject to a wide range of regulations, with main concerns around the implementation of CBAM and changes in energy and by-product legislation in Netherlands. Additionally, there is an increased trend of protectionism at a global scale, reflected in the imposition of tariffs and anti-dumping measures. TSN has a longstanding presence in the U.S. steel market where the U.S. Section 232 tariffs are still in place.
Mitigation Strategies
Regulatory risk is emerging and evolving. Tata Steel is constantly monitoring the regulatory landscape to proactively assess the changing laws and policies that may impact the Companys operations and future growth trajectory. The Company has a policy of zero tolerance towards non-compliance. The Company has robust compliance management systems to ensure awareness and compliance.
The Company complies with existing laws and regulations while promoting environmental stewardship.
Tata Steel identifies key issues and opportunities for policy advocacy to promote best available practices, ensure level playing field through safeguard measures and improved ease and cost of doing business. It engages with policymakers and relevant stakeholders to develop strategies to give shape to a progressive policy environment in the country.
Tata Steel will continue to focus on technology, research and development as a proactive approach towards evolving regulatory requirements along with digitalisation of the monitoring and reporting mechanisms in response to the changing regulatory landscape and growing stakeholders concerns.
The effort is on building capacity and securing resources for our journey towards decarbonisation of 2045. TSN and Tata Steel UK are working with the Government on the shared objective of creating an achievable, long-term plan to support the steel sectors transition to future.
a competitive, sustainable and low CO
2TSN continues to monitor import activity (volume and prices) and works with Eurofer (European Steel Association) to monitor the need for additional trade defense measures to protect the European steel industry from being hurt by dumped steel imports. In addition, TSN sees a continuation of current EU safeguards measures beyond June 2024 as an absolute necessity. While CBAM will be important in ensuring a level playing field for EU steel, however, the uncertainty surrounding the exact functioning of CBAM remains a watchpoint. During transition, Tata Steel UK will rely upon steel imports, from both Europe and the rest of the world, and are in discussion with the Trade Remedy Authority (‘TRA) regarding revision of the relevant quotas, to enable sourcing of the required volumes without unsustainable tari_ costs.
Operational Risks
The steel manufacturing processes are vulnerable to disruptions resulting from a range of external and internal factors. Rising uncertainty in extreme weather conditions, natural disasters, supply chain disruption are some of the external factors whereas equipment failures, maintenance delay and process safety related incidents are some of the internal factors. Further, Tata Steel UK has specific issues of ageing assets. Such disruptions may impact the Companys operations, safety, and customer service levels.
Mitigation Strategies
The Company endeavours to ensure plant availability, eliminate defect generation through equipment (link to final Product Quality), delivery services at optimum cost and ensure supply of Power, Gas & Utilities for meeting end customer production requirements.
The Company has adopted advanced maintenance practices for enhanced plant availability and reliability. The continuously evolving Asset Management needs have accelerated change from being reactive to predictive and now with the fast-changing technological landscape, the Company is making a shift from the situation of preventive maintenance to maintenance-free assets i.e. from preventive maintenance to maintenance prevention.
Tata Steel has set up an Integrated Maintenance Excellence Centre to leverage advanced technologies such as Artificial Intelligence, prescriptive analytics and Asset Monitoring and Diagnostic Centre for enabling predictive analytics. This paradigm shift extends beyond mere Asset Management, permeating the very fabric of the approach towards a digitally enabled green economy. The robust digital ecosystem enables real-time shutdown management for optimal co-ordination and improved asset reliability across the steel value chain. Tata Steel Jamshedpur, Kalinganagar and the IJmuiden Plant in the Netherlands, have been recognised as ‘Advanced 4th Industrial Revolution Lighthouse by the World Economic Forum.
Tata Steel UK transition plan to an EAF operation is underway. Several structural improvement initiatives at IJmuiden operations are being taken under the improvement program of TSN. Corporate Asset Management Framework at TSN is delivering improved insight into the assets in relation to reliability, failure, risk and prioritisation of resources.
The Company has been working on improving structural integrity and safety of gas lines through usage of Drone based technologies for condition monitoring, thermography to identify potential blockages in gas lines, Use of Rope Access System (with web catch) for improving the roof inspection system.
The growing geopolitical situations and instances of supply chain disruptions have further aggravated the uncertainty in availability of spares which have dependence on single geography/vendor partner or have limited alternatives. Hence, the focus has been on indigenisation of spares to achieve self-reliance and to digitalise the process to maintain optimised inventory. The indigenisation initiative is aligned to the ‘Make-in-India focus and encourages the vendor partners to supply supreme quality spares and benchmark lead times.
The Company is cautious of the growing uncertainty in weather patterns leading to extreme heat and heavy rainfall. To ensure our employees safety and business operations continuity, the Company has developed a detailed disaster plan and standard operating procedures to respond to natural disasters, epidemics/pandemics, and extreme weather events.
Safety Risk
Steel industry is inherently prone to hazards affecting workforce health and safety. Any deviation in process and workforce safety requirements, safety laws and regulation may have adverse impact on business continuity and operation. This is further aggravated with the geographical expansion and diversification of our business and operations that faces various geography specific stringent safety laws and regulations.
Mitigation Strategies
Safety remains paramount in the organisation. Tata Steel operates with the objective of ‘Committed to Zero and a safety-first mindset. The Company has remained steadfast to our belief of safeguarding people and continuing business operations. The Company is continuously strengthening Safety Management and Governance mechanism and has built a safety focused culture across business operations. Risk reduction at the workplace and improvement in the risk perception of the workforce is the focus area. The Company follows uniform risk management framework and has developed online and on-site visualisation of risks.
Improving behavioral safety of the workforce at workplace through experiential learning and focus on dissemination of safety standards has been the key to improve risk perception.
Tata Steel has institutionalised business continuity management through development of tactical centre for responding to any major onsite emergency and has developed Centre of Excellence (‘CoE) in Process Safety Management to deploy standardised process safety management across the organisation. Safety Excellence Reward and Recognition framework has been extended beyond managerial positions and vendor partners for demonstrating safety commitment and promoting a culture of safety in the organisation.
Further, Tata Steel emphasises on skill development and training of all stakeholders such as employees, vendor and business partners, trainees at regular intervals. Practical Safety Training Centre has been developed with a purpose to improve the risk perception of the workforce on various critical hazards. Here, hands-on training is imparted on different modules such as Working at Height, Material Handling, Gas Safety, Con_ned Space, Heavy vehicle simulators, First Aid & Cardiac Pulmonary Resuscitation and Virtual Reality for moving machinery. Various campaigns such as ‘Road Safety Month, ‘National Safety Week and those related to mitigation of risks associated with top hazards are undertaken. Deeper introspection on road safety practices, reaching beyond the Company premises, systematically introducing technological interventions on roads and vehicles, and connecting with all the road pilots on one-to-one basis has improved the risk perception and behavior. Additionally, focused campaigns such as ‘Process Safety Alerts, Know Your PPE Series, etc. to identify the hazards and its risk mitigation by risk hierarchy of control philosophy has reinforced safe behavior among Company employees and contract employees. Tata Steel has also launched the revisited ‘Life Saving Rules specific to nature of operation ranging from Mining, Operation and Maintenance, and Construction.
Workplace Safety and Process Safety Management in Tata Steel have matured over the years through adoption of various robotic and technological solutions to eliminate man-machine interface. Digital platforms have been continuously enhanced to address and mitigate key concerns. In this regard, through its various command centres, Tata Steel leverages the CCTV infrastructure to identify unsafe behavior and proactively prevent incidents.
At Tata Steels UK operation, a time-out for safety campaign, which was rolled out across all employees and core contractors in the UK, continued throughout FY2023-24. Positive feedback and impact since this started has increased the level of engagement.
Community Risk
The Company has always centered its business model and social engagement around community collaboration, aiming for tangible improvements in quality of life, particularly for marginalised groups in the vicinity of its operations.
There are growing expectations of the communities proximate to the Companys operating locations. Inability to address expectations or an erosion of trust with the communities arising out of any situation has bearing on the Companys societal impact and harm our reputation or impede business continuity. Moreover, there is a growing pressure from local communities proximate to Tata Steels coal-based manufacturing facilities in Netherlands over emissions.
Failure to effectively implement identified CSR initiatives could result in resentment or protest from key stakeholders.
Mitigation Strategies
The Company has comprehensive mitigation strategies to address societal development challenges. A focused strategic approach is towards becoming the industry leader in CSR by creating long-lasting relations with communities in its operational areas. The various focused programs are implemented through the Tata Steel Foundation in India. The Company implemented various programs and collaborated with multiple platforms to address the societal development challenges that has impacted over 4.4 million lives directly in FY2023-24. One of the key programs was community led-water conservation efforts yielding more than 100 million cubic feet of recharge capacity in key watersheds.
The Company has also developed various programs to create change models in the ecosystem. The key programs are highlighted as: i) Signature health program is a lifecycle approach to maternal and child health and nutrition (MANSI+). It covers the entire Kolhan division of Jharkhand. Project works in close coordination with frontline health workers (Sahiya) to ensure Institutional delivery of identified high risk pregnant women that has been 87.2% in FY2023-24. ii) Signature program on education rolled out in 37 blocks of Jharkhand and Odisha wherein the learning model has been devised to provide access to school for out of school children, learning support to overcome deficits, and governance for strengthening the school management. iii) Samvaad: Over 150 tribes across 24 states of the country have come together through dialogues and other engagement aimed at preserving tribal culture and practices iv) Development Corridor program focus on strengthening and functioning of the grassroots governance at 72 panchayats across the 272 km stretch of road that connects Tata Steel at Jamshedpur and Kalinganagar. v) Embedding societal perspective in business decisions: Tata Steel leverages its experience and capability in societal impact to build impact ecosystems, engaging partners for regions and communities that need deeper attention. The Company also believes in the power of empathy within an organisation, and hence the need for senior officers and frontline managers to be sensitised towards key development challenges of the Dalit and tribal discourse. Accordingly, a social immersion program ‘Unurum was initiated and many senior, middle and entry level executives have undergone this program. This was extended to sensitise future business leaders from management school to develop deeper understanding of socio-economic realities faced by the most vulnerable communities because of non-inclusive industrialisation. vi) Identification and engagement with key stakeholders: The Company convenes structured forums periodically to engage in dialogue with communities, facilitating co-creation of a shared impact agenda and replicating successful processes in new locations. vii) Facilitating dialogue through social and traditional media. The Company also implements a dedicated social media strategy that entails putting out ground-up communities on the digital space for the right voices to amplify its impact and engage with a wider audience, facilitating dialogue and share progress transparently. Along with traditional media and AI, the Company believes in the power of communities speaking their minds and enable the right narrative to be amongst all.
Tata Steel UK is working closely with the Transition Board and national stakeholders to ensure economic regeneration of South Wales.
Tata Steel UKs Community Partnership Program ‘Future Generations, with sub-themes of education, environment, health, and well-being, works across the UK, assisting job and wealth creation by supporting small and medium businesses with finance and business premises.
TSN is actively pursuing measures through ‘Roadmap+ program to reduce emissions such as nitrogen oxide, dust deposition, polycyclic aromatic hydrocarbons, heavy metals, lead, particulate matter, etc. to address health concerns of IJmuiden communities and support local initiatives.
Supply Chain Risk
Supply Chain Division is responsible for planning, sourcing, delivery, and logistics of more than 100 MT of materials which include raw materials, finished goods and by-products across Tata Steels footprint. Annually, more than 60 MT of Raw Material comprising of 200+ grades from 50+ sources located across the globe is planned, scheduled, and transported to our consumption centres.
On the delivery side, 32 MT of finished goods consisting of multiple SKUs from various production units (inclusive of Steel Processing Centers) are delivered to a diverse group of customers.
Since, Tata Steel is on a journey to expand its Indian operations, it would entail doubling of movement for another ~20 MT Crude Steel production in fully ramped up stage thereby further adding to the scale and complexity.
The Indian Steel Industry is expected to grow at 7% CAGR till 2030 with 25% of the capacity planned in Odisha (~75 MT), thus adding to the existing infrastructural stress particularly on railways and ports in Eastern India. Events like the power crisis occurring every year puts stress on the rake availability. In addition, railways accidents, regional strikes (e.g.: Kurmi strike in FY2023-24) add to the uncertainty particularly in raw material circuit which is heavily dependent on railways for movement. There is now a constant risk of escalation of geo-political tensions, or any other black swan event impacting supply chain reliability and delivered cost due to increased ship/ container freights and lower container availability. The ongoing Russia-Ukraine conflict, Red Sea crisis are some such events that may pose risk to our Shipping operations and spend. The statutory norms are also getting more stringent thus making it necessary to address the Environmental, Social and Governance (‘ESG) issues for scope3 operations also. Thus, supply chain faces a potential multi-faceted risk of business discontinuity due to disruption in infrastructure, market, changing policies and statutory norms.
Mitigation Strategies
? Debottlenecking Port Infrastructure: Tata Steel has long-term partnership agreements with major ports like Dhamra and Paradip Kalinga International Coal Terminal Private Ltd to de-risk import supply chain. In view of long-term growth plan, work is in progress for tie up/investment in new port infrastructure.
? Alternative to Indian Railways: To improve the reliability, Tata Steel has invested in private freight train schemes- 13 new rakes were added under General Purpose Wagon Investment Scheme and 11 new rakes were introduced under Special Freight Train Operator in FY2023-24. In the long-term, Tata Steel is working on commissioning a 7 MTPA slurry pipeline from its iron ore mines to plant. In addition, projects have been taken up to improve road infrastructure in Kalinganagar and Meramandali for raw material movement.
? Controlling Freight/logistics costs: Tata Steel has been able to maintain its shipping spend within the plan through continuous portfolio management and hedging initiatives.
? Sustainability Initiatives: Supply Chain has strengthened tracking and measurement of Scope 3 emissions and has proactively undertaken several initiatives for its commitment towards a greener supply chain. Tata Steel has increased deployment of CNG/LNG/EV vehicles from 69 in FY2022-23 to 191 in
FY2023-24 in its short lead circuit to reduce its CO
2footprint from road movement. This is further being increased to almost double the current number in FY2024-25. In FY2023-24, Tata Steel became the first Indian company to import cargo on Lique_ed Natural Gas (‘LNG) fueled bulk carrier. 5 such shipments for imported raw materials were performed in FY2023-24 in addition to 22 biofuel-based shipments. More such shipments are in pipeline to be executed in coming years using alternate fuels such as Biofuel, Ammonia, Methanol etc.
Information Security Risk:
The Companys operations significantly rely on IT and digital infrastructure. The organisation has made several investments on digital transformation for important and complex processes. Key attributes of Digital transformation journey are the connected Architecture i.e., B2B integrations, Information Technology (IT) and Operating Technology (‘OT) integration channels for Analytics and Insights, remote operations which brings many benefits, such as increased efficiency, better decision-making, and improved operational performance.
Accelerated pace of digitisation of our vast value chain also brings the need to identify and mitigate emerging risks arising from advancements of technology usage such as Al deployment, Robotics Process Automation, Machine Learning etc. AI is getting adopted wherever feasible and applicable. Generative AI is also transforming the way Company interacts with customers and is driving business growth.
However, these integrations increase the organisations exposure to cyber and privacy risks, non-compliance to industry laws and regulations, faulty and offensive data as well as performance instability.
Digital Personal Data Protection Bill, 2023 has data privacy laws and regulations to govern the data privacy and protection requirements. Non-compliance to IT legislations and regulations may lead to imposition of penalties and adverse impact on Companys reputation. It is imperative that the organisations comply to privacy policy defined for the purpose.
Organisational data needs to be protected for confidentiality, integrity, and availability in accordance with the data governance norms.
While technology is kept as best as recent and supportable, obsolescence in technology needs to be addressed to eliminate any kind of cyber risk and business continuity risk.
Mitigation Strategies
Tata Steel has implemented advanced security measures such as strong access controls, Next Generation Firewall, Advanced Threat Protection, End Point Detection and Response to give real time detection capabilities based on behavior, lateral movements.
Integrated IT & OT Security Operation Centre has been implemented to give near real time visibility of security events generated on systems to identify abnormalities with immediate trigger to mitigation actions. 24*7*365 external attack surface management has been set up to identify potential risks over internet and try out exploits in attackers perspective which helps to take immediate mitigation before being identified and utilised by attackers.
The Company has implemented various policies and procedures to ensure data privacy. Pro-active software asset management is being carried out to ensure compliance.
Data governance has been implemented to ensure that data is well protected with required level of confidentiality, integrity and availability including retention of data as per regulations.
It is also ensured that the con_guration and consumption of Gen AI tech is done in a secure private environment to prevent risk emanating from AI adoption.
Continuous technology refresh is taken up to eliminate risk of technology obsolescence according to business priorities.
Tata Steel regularly assesses cybersecurity posture and conducts security audits to identify potential vulnerabilities. The same security initiatives are being extended to Tata Steel Group Companies (‘TSGCs) and has implemented Security information and Event management as core fundamentals of Security Operation Centre in various TSGCs. Zero Trust Architecture is also being implemented for TSGCs.
Commodity Risk
Raw materials (primarily iron ore and coal) and Bulk Commodities (refractory, De-Sulphurisation compound, ferroalloys etc.) contribute to a major part of the procurement spend of Tata Steel. In recent years, commodity markets have seen high price volatility driven by various geopolitical events, weather disruptions, mining issues etc. These events have also led to supply chain disruptions and imbalances reducing reliability and impacting inventory. Therefore, an agile response to mitigate price risk while maintaining a secure and stable supply chain is critical.
Raw Material Procurement
? Seaborne supply of coal has been largely dependent on Australia. While prices of PCI and soft coal have softened in the recent past, dependency on Australia for PCI is still high. The Company has made steady progress in trying new coals from alternate geographies thereby, mitigating the risk.
? Extreme weather events in key raw material exporting countries like Australia, Canada and geo-political events pose risk to the supply chain reliability beyond the price risk.
? Limited investment in new mines mainly in Australia, driven by decarbonisation, may impact long-term demand supply balance for metallurgical coal. ? High dependency on specific geographies for material sourcing (Australia for metallurgical coal and South Africa for DRI grade thermal coal) poses a high risk in case of any force majeure situation. ? High dependency on Talcher coalfields area to meet demand of non-coking thermal coal leading to a risk of supply chain disruption if operations are interrupted in any of their collieries.
? Announcement of auctions (linkage and spot) for Non-Regulated Sector (‘NRS) and material movement by road mode only increases the dependency on fleet movement, which may sometimes impact the inventory levels due to sudden restrictions imposed by local administration bodies, leading to unavailability of road transport. ? Considering demand and supply ratio from sectors other than captive power plant like independent power producers, fertilisers, cement etc. lead to a risk of exposure to high premiums in spot auctions. ? Unlike Indian operations, both TSN and Tata Steel UK do not have access to captive iron ore, therefore access to and pricing of iron ore supplies depend, to a large extent, on worldwide supply and demand relationships.
Bulk Procurement
? Few of the commodities that are used as inputs in steelmaking have over dependence on China or other single geography which poses a potential risk of supply disruption due to Black swan events like Red Sea crisis, etc.
? China, being the largest producer of steel making process consumables, is a major determinant of the price trends of these consumables. Though the prices of these consumables have been on a gradual decline over the months, changes in market sentiment in China has the potential to affect the volatility of these materials.
? Changes in statutory and sustainability norms in importing/exporting countries pose a threat to the reliability of the supply chain.
? Exposure to energy shortages and price increases are also a relevant risk due to multiple ongoing geopolitical disruptions.
Mitigation Strategies
Changing prices of coal and iron ore generally reflect through adjustments in steel prices, which in effect acts as a natural hedge against volatility. However, there may be a lead and lag involved and hence, several steps are being taken to manage the price volatility –? For iron ore buy from external market, the Company hedges the spread between the bought-out ore and confirmed steel orders. The Company has also started hedging of coal buy.
? Price forecasting tools are being used for commodities like Coal, Zinc, Aluminum etc. to understand price movements and time the buy to optimise costs. ? Tools like reverse auctions are being used for efficient price discovery for commodities like coal, ferro alloys, refractories etc.
? Captive/domestic raw materials provide another avenue to guard against volatility as they have relatively stable cost/price.
? Diversifying coal sourcing from countries like Indonesia, USA, and Canada and long-term tie-ups to secure preferred grades to ensure long-term supply security.
? Trial of new grades of coals and blend optimisation with increased usage of weaker/lower cost coals are used to mitigate price risk.
? Evaluating potential sources with other geographical locations in Odisha and Chhattisgarh - like IB valley coalfield and Talabira mines in Odisha and Kusmunda and Gevra which are the collieries of South-Eastern Coalfields Limited in Chhattisgarh to minimise the risk on supply security of non-coking thermal coal. ? Contracting with local suppliers by rail mode to increase the rail co-e_cient for consistent and uniform domestic coal supplies.
? Maximising Fuel Supply agreement to mitigate the risk of prevailing market volatility due to gap in demand and supply effecting premiums of spot auction events. ? For bulk commodities, Indigenisation has been identified as one of the major levers to de-risk the supply chain for both direct and indirect commodities which are dependent on import sources (like De-Sulphurisation compounds, refractories, cored wires etc.) to ensure safeguarding against geo-political escalations and single country dependence. Where indigenisation is not possible, alternate country sourcing or development of substitute products is also under implementation. ? Tata Steel is collaborating with Government of Odisha and has ear marked ~100 acre of land close to Kalinganagar, where vendors can set up local manufacturing units/refurbishment plants/Assembly units/warehouses which will enable localisation and development of local supplier eco-system and a leaner supply chain for Tata Steel.
? Tata Steel ensures that all suppliers mandatorily sign the Tata Business Associate Code of Conduct during the vendor onboarding process. High risk vendors undergo an assessment for adherence to Anti-Bribery & Anti-Corruption (‘ABAC) and Anti-money Laundering (‘AML) policies. This is also incorporated in the contract clauses of the purchase order which enables adherence to the ABAC and AML policies.
? The Company has adopted sustainable procurement policy wherein the Company engages with its suppliers/service providers to take initiatives in the areas of reduce, recycle, and reuse.
? Risk assessment for key vendors is also undertaken to assess the capability of vendors in meeting the supply requirement.
? Additionally, TSG continues to target measures to reduce its energy requirements, e.g. by increasing self-generation of electricity and efficiency improvements.
IX. Internal Control Systems and its Adequacy
The Company has an Internal Financial Controls (‘IFC) framework, commensurate with the size, scale, and complexity of the Companys operations. The Board of Directors of the Company is responsible for ensuring that IFC have been laid down by the Company and that such controls are adequate and operating effectively. The internal control framework has been designed to provide reasonable assurance with respect to recording and providing reliable financial and operational information, complying with applicable laws, safeguarding assets from unauthorised use, executing transactions with proper authorisation, and ensuring compliance with corporate policies. The Companys internal financial control framework is commensurate with the size and operations of the business and is in line with requirements of the Companies Act, 2013. The Company has laid down Standard Operating Procedures and policies to guide the operations of each of its functions. Business heads are responsible to ensure compliance with these policies and procedures. Robust and continuous internal monitoring mechanisms ensure timely identification of risks and issues. To make the controls more robust and comprehensive, IFC standardisation and rationalisation project was undertaken three years ago which had ensured comprehensive coverage cutting across all functions of the Company. To reduce manual time and efforts involved in control testing, improve confidence in testing results, increase the frequency of testing and resort to full checking of the data as compared to sample testing, automation of controls was also undertaken in FY2021-22 whereby around thirty percent of the controls were automated which have been tested in automated environment in the current financial year also. The management of the group companies which have merged with the Company during the current financial year have confirmed compliance of the internal financial controls. The management, statutory auditors and internal auditors have also carried out adequate due diligence of the control environment of the Company through rigorous testing.
The Company has deployed SAP Governance, Risk and Compliance Module and other IT platforms to keep the IFC framework robust and our Information Management Policy governs these IT platforms. IFC has been documented and embedded in the business processes and such controls have been assessed during the year under review and no material weaknesses were observed.
X. Statutory Compliance
The Company has in place adequate systems and processes to ensure that it is in compliance with all the applicable laws. The Company Secretary & Chief Legal Officer (Corporate & Compliance) is responsible for implementing the systems and processes for monitoring compliance with the applicable laws and for ensuring that the systems and processes are operating effectively. The Chief Executive Officer and Managing Director, places before the Board, at each meeting, a certificate of compliance with the applicable laws. The Company Secretary & Chief Legal Officer (Corporate & Compliance) also confirms compliance with Company law, SEBI Regulations and other corporate laws applicable to the Company.
IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000
IIFL Securities Support WhatsApp Number
+91 9892691696
Download The App Now
Follow us on
2024, IIFL Securities Ltd. All Rights Reserved
www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.
