Overview

Established in India as Asia’s first integrated private steel company in 1907 Tata Steel Ltd (NSE:TATASTEEL) is currently the world’s second-most geographically diversified steel producer. Tata Steel is one of the few steel operations that are fully integrated – from mining to the manufacturing and marketing of finished products.

Continuous improvement in its product and service portfolio, along with success in value creating initiatives for customers, allows it to serve global growth markets. Today, the company operate in 26 countries and have a commercial presence in over 50 countries with employees across five continents. And the numbers are growing.

The company's Raw Material operations are spread across India and Canada which help it to be self-sufficient in steel production. Key manufacturing functions are performed by the raw materials and iron-making groups, while Shared Services provides maintenance support for a smooth production. In India, its downstream business activities are structured into strategic business units such as Ferro-alloys and Minerals, Tubes, Wires, Bearings, Agrico, Industrial By-products Management & Tata Growth Shop.¹

INDIA

Tata Steel was established in India as Asia’s first integrated private steel company in 1907. With this, the company also developed India’s first industrial city at Jamshedpur. Today, Tata Steel is among the leading global steel companies. The company's annual crude steel capacity across Indian operations is nearly 13 MnTPA and the company registered a turnover of US $7889 Mn in FY 2017. The company also set up its second greenfield steel plant in the eastern state of Odisha; commissioning the first phase (3 MnTPA) of 8M tonnes of steel capacity in 2016. The company possess and operate captive mines that help it maintain cost-competitiveness and production efficiencies through an uninterrupted supply of raw material. This is how the company ensure that the company remain the lowest cost producer of steel in Asia.

EUROPE

Tata Steel is the second largest steel producer in Europe with a crude steel production capacity of over 12.1 MnTPA. The company established its presence in the European continent after acquiring Corus in 2007. The manufacturing facilities in Europe comprise hubs (Strip Products Mainland Europe, Strip Products UK and Downstream Operations) and integrated businesses (Plating and Cogent Power). Tata Steel has two integrated (blast furnace-based) steel-making sites in Ijmuiden, the Netherlands and Port Talbot, South Wales respectively. Other facilities across Europe produce a variety of special steels, ultra-pure re-melted steels and various rolling and coating lines.

SOUTH EAST ASIA

Tata Steel’s operations in South-East Asia began in 2004 with the acquisition of NatSteel, Singapore. The operations are run by NatSteel Holdings Pte Ltd., a wholly-owned subsidiary of Tata Steel. In 2015, the company acquired a majority stake in Thailand-based steelmaker Millennium Steel, which strengthened its South-East Asian operations. Tata Steel is concentrating its efforts in the region to grow its value-added products and services portfolio, while strengthening its key steel operations in Singapore, Thailand and China.

Brands

India

• Tata Tiscon
• Tata Structura
• Tata Shaktee
• Tata Bearings
• Tata Astrum
• Tata Steelium
• Galvano
• Tata Ferro Alloys and Minerals Division
• Tata Precision Tubes
• Tata Wiron
• Tata Agrico

Europe

• Ymagine
• Protact
• Magizinc
• Comflor
• Trisobuild

South East Asia

• Tiscon Superlinks
• Tata Tiscon

Plant Locations

India

Outside India

• Port Talbot
• Llanwern
• Shapfell
• Corby
• Shotton
• IJMUIDEN

Key Subsidiary

The Tata Steel group has spawned several companies that are leaders in their sphere of operations.

Industry Overview

Global Steel Industry

Global crude steel production in 2019 saw a growth of 3.4% over 2018 to reach 1,869.69 MnT. This increase was primarily due to the growth in steel consumption in infrastructure, manufacturing, and equipment sectors. The automotive production trended down across most countries over the second half of 2019 which had an impact on the steel demand towards the end of the year.²

China continued to be the world’s largest steel producer with increase in production by 8.3% to reach 996 MnT. China contributed to 53% of the global crude steel production in 2019. While steel demand remained relatively strong, the country faced significant downside risks due to broader global uncertainty and tighter environmental regulations. In United States, crude steel production went up to 88 MnT, recording an increase of 1.5% over 2018, owing to lower global automotive production and prevailing trade tensions. In Japan, steel consumption declined largely due to a slowdown in manufacturing during 2019. The country produced 99 MnT of crude steel last year, a decrease of 4.8% compared to 2018. In Europe, crude steel production slumped to 159 MnT in 2019, recording a decrease of 4.9% over 2018. The decrease was on account of challenges faced with oversupply and trade tensions.

In 2019, India became the second largest crude steel producing country in the world, with a crude steel production of 111 MnT, an increase of 1.8% over the previous year. However, the growth rate was much lower compared to the previous year. Growth in the construction sector weakened due to falling investments in fixed asset formation. Sharp fall in the private consumption led to weaker growth in automotive and consumer durables. The tighter liquidity conditions due to defaults in NBFC sector impacted credit availability. The automotive sector was also impacted by factors such as regulatory changes, rise in ownership cost, and shared economy while, the capital goods sector continued to remain weak due to the decreasing output and stagnant investment in the manufacturing sector.

Financial Highlights

During the year ended March 2020, the Tata Steel Group (‘the Group’) recorded total deliveries of 26.68 MnT (previous year: 26.80 MnT). The steel deliveries decreased at Tata Steel Limited by 2.9% and at Tata Steel Europe by 4%. This decrease was off-set by higher deliveries at Tata Steel BSL Limited (‘TSBSL’) by 16%. The increase at TSBSL is due to ramp-up of operations. Further, in the previous Financial Year 2018-19, deliveries prior to the acquisition of TSBSL on May 18, 2018 under Insolvency and Bankruptcy Code were not included. Further, the acquisition of the steel business of Usha Martin Limited by Tata Steel Long Products Limited (‘TSLP’) (formerly Tata Sponge Iron Limited) on April 9, 2019, also increased the total deliveries of the Group by 0.51 MnT. The turnover for the Group was at Rs 1,39,817 crore during the Financial Year 2019-20 (previous year: Rs 1,57,669 crore), a decrease of 11% over the previous year due to decline in realisations across geographies along with lower deliveries. Further, the EBITDA for the Group was Rs 17,735 crore during the Financial Year 2019-20 as compared to Rs 29,770 crore in the previous year.

During the year under review, the Group reported a consolidated profit after tax (including discontinued operations) of Rs 1,172 crore as against a profit of Rs 9,098 crore in the previous year. The decrease was mainly due to lower operating profits attributable to decline in the steel prices during the year, higher exceptional charge, partly offset by lower tax expenses primarily on account of re-measurement of deferred tax liabilities based on the new lower rate of Income tax prescribed under Section 115BAA of the Income Tax Act,1961, along with creation of deferred tax assets at some of its foreign entities.

During the year under review, the Company, on a consolidated basis spent Rs 10,398 crore on capital projects across India, Europe and Canada largely towards on-going projects in India (Kalinganagar plant and Tata Steel BSL Limited), essential sustenance, and replacement schemes.

The Company’s liquidity position remains strong at Rs 17,745 crore as on March 31, 2020, comprising Rs 11,549 crore in cash and cash equivalent and balance in undrawn credit lines.

India

During the year under review, total deliveries at Tata Steel Limited (Standalone) were at 12.32 MnT (previous year: 12.69 MnT), recording a decrease of 2.9% over the previous year. Turnover was Rs 60,436 crore (previous year: Rs 70,611 crore), decrease of 14.4% than that of the previous year. EBITDA from Tata Steel Limited (Standalone) was Rs 15,096 crore (previous year: Rs 20,744 crore), 27.2% lower than that of the previous year.

During the year under review, the crude steel production in India increased by 8% to 18.20 MnT with ramp up at TSBSL and acquisition of steel business of Usha Martin Limited by TSLP. TSBSL achieved best ever crude steel production and sales at 4.46 MnT and 4.14 MnT, respectively due to improved maintenance practices, higher capacity utilisations, and marketing synergies. TSLP which acquired steel making facility of Usha Martin Limited, during the year, achieved crude steel production of 0.58 MnT while deliveries stood at 0.51 MnT.

Total deliveries of Tata Steel from its Indian operations (including TSBSL and TSLP) stood at 16.97 MnT i.e. 4% higher than the previous year. The turnover and EBITDA (excluding inter-company eliminations and adjustments) was Rs 82,125 crore and Rs 17,650 crore, respectively.

During the year under review, Sukinda Chromite mine and Gomardih Dolomite mine leases expired on March 31, 2020, as per the mining regulations . Tata Steel Mining Limited (formerly T S Alloys Limited), a wholly-owned subsidiary of the Company, has won the Sukinda Chrome ore mines in the auction and the lease grant process is underway. Further, Tata Steel Mining Limited also signed 50 year leases for Kamarda and Saruabil Chrome mines. With these mines, Tata Steel Mining Limited is well placed to cater to its global customer base as well as requirements of the Group.

Europe

During the year under review, liquid steel production from European operations was 10.26 MnT (previous year: 10.31 MnT). Deliveries from European operations decreased by 4% to 9.29 MnT primarily due to overall weakness in economic activities. Turnover from operations was Rs 55,939 crore (previous year: Rs 64,777 crore). The decrease in turnover was primarily due to sharp decline in European steel prices and lower deliveries, resulting in loss of Rs 664 crore at the EBITDA level.

The Company is committed to make its European operations simpler, leaner, and sustainable. It has launched a transformation programme to generate savings across multiple initiatives.

Key Developments

During the year under review, the Board of Directors of the Company, at its meeting held on April 25, 2019, approved the amalgamation of Bamnipal Steel Limited and Tata Steel BSL Limited, into and with the Company by way of a composite scheme of amalgamation.

During the year under review, Tata Steel BSL Limited (‘TSBSL’), an indirect subsidiary of the Company, completed the acquisition of controlling stake in Bhushan Energy Limited (now Angul Energy Limited) (‘BEL’), pursuant to the Resolution Plan as approved by the National Company Law Tribunal (Principal Bench, New Delhi) vide its Order dated May 30, 2019, under Corporate Insolvency and Resolution Process of the Insolvency and Bankruptcy Code, 2016. Consequently, BEL became a subsidiary of TSBSL effective June 1, 2019.

During the year under review, T S Global Holdings Pte. Ltd. (‘TSGH’), an indirect wholly-owned subsidiary of the Company, for want of regulatory approvals, decided not to pursue the proposed transaction with HBIS Group Co. Ltd. (‘HBIS’), to divest its entire equity stake in NSH (100%) and TSTH (67.9%) to a company in which 70% equity stake would be held by an entity controlled by HBIS and the balance 30% by TSGH.

Tata Steel Consolidated December 2020 Net Sales at Rs 39,594.09 crore, up 11.47% Y-o-Y ³

February 09, 2021; Reported Consolidated quarterly numbers for Tata Steel are:

Net Sales at Rs 39,594.09 crore in December 2020 up 11.47% from Rs. 35,520.41 crore in December 2019.

Quarterly Net Profit at Rs. 3,697.22 crore in December 2020 up 440.88% from Rs. 1,084.62 crore in December 2019.

EBITDA stands at Rs. 9,678.51 crore in December 2020 up 160.69% from Rs. 3,712.67 crore in December 2019.

Tata Steel EPS has increased to Rs. 31.86 in December 2020 from Rs. 9.43 in December 2019.

References

1. ^ https://www.tatasteel.com/corporate/our-organisation/company-profile/
2. ^ https://www.tatasteel.com/media/12381/tata-steel-ir.pdf
3. ^ https://www.moneycontrol.com/news/business/earnings/tata-steel-consolidated-december-2020-net-sales-at-rs-39594-09-crore-up-11-47-y-o-y-6482021.html