Tata Steel reports one of the best quarterly financial results in recent times

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Mumbai: Tata Steel, today, announced financial results for the quarter and half year ended September 30, 2020. The Company has delivered strong results in India with broad based, market leading volume growth and strong cashflow generation.
Consolidated profit after tax from continuing operations increased by 136% QoQ to Rs.1,635 crores. Key subsidiaries, Tata Steel BSL and Tata Steel Long Products also delivered strong operating performance.
EBITDA from India operations surged four times as compared to Q1FY21 to Rs.6,025 crores, driven by higher volumes, improved realisations and cost efficiencies. The Free Cash Flow generated during the quarter was Rs.7,832 crores. The Company has reduced net debt by Rs.8,197 crores during the quarter.
“It is very heartening to report that despite the pandemic, Tata Steel has delivered one of the best quarterly results in India in the recent times. This was driven by relentless focus on operating performance and a reduction in our cash costs by almost 14% on a quarter on quarter basis,” said Koushik Chatterjee, Executive Director and CFO.
All major sites in India are operating close to full capacity utilization. Quarterly deliveries at India operations grew 72% Quarter on Quarter and 22% Year on Year.

Tata Steel is reorganising its India footprint and folding listed and unlisted subsidiaries into 4 clusters to drive scale, synergies and simplification and to create value for all stakeholders. The business clusters are Long products, Downstream, Mining and Utilities & Infrastructure.

Today, the Boards of Tata Steel Long Products, Tata Metaliks and Indian Steel and Wire Products approved the merger of Tata Metaliks and Indian Steel and Wire Products into Tata Steel Long products. The proposed consolidation will create significant synergies and position the company towards future growth in the long products segment. We expect to complete the process in next 6-9 months, subject to necessary regulatory approvals.

“The resilience of our business model and the commitment of our teams has enabled us to ramp-up capacity utilization to normal levels and achieve highest ever sales despite the ongoing challenges due to the COVID pandemic. There has also been a significant improvement in product mix towards domestic sales and higher value-added products and a sharp reduction in costs. We are now embarking on re-organizing our Indian subsidiaries into four verticals to drive scale, synergies and simplification which we are confident will create value for our stakeholders,” said T V Narendran, CEO & Managing Director, Tata Steel.

The company has initiated discussions with SSAB Sweden based on interest received for the potential acquisition of Tata Steel’s Netherland business including Ijmuiden steelworks. The company has also commenced discussions with the Supervisory Board and Board of Management of Tata Steel Netherlands and the process will move to the next stage including due diligence and stakeholders’ consultations. The Company is committed to deploy proceeds of any strategic restructuring towards additional deleveraging of the balance sheet.

The company has also initiated the process to separate Tata Steel Netherlands and Tata Steel UK and will pursue separate strategic paths for the Netherlands and UK business in the future. Tata Steel continues its dialogue with the UK Government on potential measures to safeguard the long-term future of Tata Steel UK and is also reviewing all options to make the business self-sustaining without the need for any funding support from Tata Steel India in the future.

“In Europe, though the overall environment remains challenging and recovery is more gradual, there has been an improvement in volumes and sales mix. We will continue to drive performance and work on a strategic resolution to ensure the focus remains on cash flows and self-sufficiency. We are continuing our discussions with the UK Government regarding the future strategy of our UK business,” Narendran added.

“Based on the discussions, initiated by SSAB Sweden, regarding a potential acquisition of Tata Steel’s Netherlands business, we will undertake a due process and move to the next stages including consultation and due diligence. In India too, we are moving on the consolidation and the corporate simplification process with the announcement today of the merger of Tata Metaliks and Indian Steel and Wire products into Tata Steel Long Products,” Koushik added.

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