In FY2023-24, Tata Steel's Indian operations delivered the highest ever
crude steel production at 20.8 MT and delivered the highest finished steel at 19.9 MT.
Dear Shareholders,
I hope this letter finds you and your families well.
The global economy, in CY2023, showed resilience despite geopolitical
uncertainties, inflationary pressures, tighter monetary policies, sovereign debt concerns
and sluggish trade. We expect infrastructure build, investments led by new technologies,
and demographics of emerging markets to continue to drive global growth, estimated at 3.2%
in CY2024, similar to CY2023.
The Indian economy maintained a steady momentum within the uneven
global macro-economic landscape, supported by public spending on infrastructure and
digitalisation, as well as reforms directed towards ease of doing business and
incentivising new investment. In FY2023-24, the Indian GDP has grown at 8.2%, which is
substantially higher than the global_benchmark.
The steel industry fundamentals reflected these macro conditions, with
geopolitical concerns and moderating demand in China resulting in pressure on steel
prices, while input costs have remained relatively elevated and environmental and
regulatory costs continue to rise. At the same time, the Indian market stood out as robust
infrastructure spending, resurgence in private sector investment and robust demand meant
that the industry saw crude steel production growth of 13% over the previous fiscal. We
expect this trend to continue, with domestic steel demand remaining buoyant in FY2024-25
on the back of expansion in economic activity, while pricing conditions might see periods
of pressure driven by global economic trends and policy changes.
In FY2023-24, Tata Steel's Indian operations delivered the highest ever
crude steel production at 20.8 MT and delivered the highest finished steel at 19.9 MT.
Tata Steel undertook successful trial of hydrogen injection in the E Blast Furnace at
Jamshedpur. It was for the first time in the world that such a large quantity of hydrogen
was continuously injected in a blast furnace.
Also, the Company encountered delays in large projects like the
relining of Blast Furnace 6 in the Netherlands and Kalinganagar downstream. The insights
gained from these delays will contribute to the smoother and more timely execution of
ongoing projects.
As we expand operations, focus on safety becomes extremely important.
We are dedicated to strengthening our processes and practices to achieve our goal of zero
harm. The Company also made significant progress towards simpli_cation of its portfolio.
The Company has successfully amalgamated five of its key entities in India.
Coming to the Company's_financial performance in FY2023-24,
the_consolidated revenues were at _2,29,171 crore compared to _2,43,353 crore in FY2022-23
and the consolidated EBITDA was _23,402 crore in FY2023-24 compared to _32,698 crore in
FY2022-23. In FY2023-24, the Company's consolidated net loss was _4,910 crore
compared to a profit after tax of _8,075 crore in FY2022-23. The consolidated financial
performance of the Company in FY2023-24 was impacted by weaker sales realisations,
comparatively elevated raw material costs, a sharp fall in volumes at Tata Steel Nederland
due to blast furnace relining, and high costs of operations on the back of declining
reliability and productivity at the end-of-life heavy-end assets in Tata Steel UK. In
FY2023-24, the standalone revenues were _1,40,987 crore compared to _1,42,913 crore in
FY2022-23 and the standalone EBITDA was__31,004 crore in FY2023-24 compared to _28,754
crore in FY2022-23. In FY2023-24, the Company's profit after tax was _4,807 crore
compared to _14,685 crore in FY2022-23. Profit after tax was lower compared to the
previous year primarily on account of an impairment charge of _12,560 crore taken in the
standalone financial statements on account of the restructuring of the UK operations.
The Board of Directors has recommended a dividend of _3.60 per Ordinary
(Equity) Share.
On the strategic front, the Company is making significant progress
towards augmenting capacities in India to achieve its target of 40 MTPA capacity. The
Company's Kalinganagar Phase II expansion is in progress. The second blast furnace at
Kalinganagar will be commissioned by September 2024, which will take the overall
production capacity of hot metal to 8 MTPA at Tata Steel Kalinganagar, thereby expanding
the fiat products portfolio of the Company. The 0.75 MTPA scrap-based low-carbon electric
arc furnace plant in Ludhiana, Punjab, India is also expected to be commissioned in early
2026 and will expand the long products portfolio of the Company.
With respect to the UK operations, we have now identified and
implemented a clear strategy for a sustainable, self-reliant, profitable business in the
future that aligns with our global sustainability objectives. We will set up a
state-of-the-art electric arc furnace in Port Talbot, targeted to be commissioned in 2027,
which will reduce approximately 5 MT of direct emissions per annum, utilise
CO
2
locally available scrap and benefit from policies which will
significantly benefit green steel production in the future. Ahead of the transition, we
have decided that given the ageing end-of-life condition of several of the heavy end
assets, we will carry out a phased closure of the two blast furnaces by September 2024, so
as to eliminate losses in the ongoing operations. The proposed project would ensure
continuity of steelmaking in Port Talbot after the transition, while also preserving a
majority of jobs in Tata Steel UK.
We have commenced discussions with the Dutch government with regard to
the decarbonisation strategy for Tata Steel Nederland. The decarbonisation of the business
will be implemented in two phases with one blast furnace being replaced before 2030 and
the second one thereafter.
For the first phase, we have outlined a plan to transition to green
steel production by 2030 through the Direct Reduced Iron (DRI) and electric arc furnace
route.
The DRI, set to initially operate on natural gas, will seamlessly
transition to hydrogen when it emerges as an accessible and economically feasible energy
source. We hope to conclude an agreement in this fiscal year.
Meanwhile, the Company continues to prioritise research and innovation
initiatives, leverage technology and advancement in manufacturing, and tap into emerging
markets to maintain its leadership. Additionally, it remains dedicated to promoting
Diversity, Equity, and Inclusion, enhancing community engagements, and adopting
sustainable business practices to ensure a resilient tomorrow.
The Company continues to engage with communities through its
wide-ranging CSR programmes. During the year, the Company has positively impacted 4.4
million lives through its CSR programmes. The Company is committed towards improving the
quality of lives of the communities in its areas of operation. Before I conclude, I would
like to convey my gratitude to Mr O P Bhatt who retired from the Board of the Company
after serving for a decade. I also extend a warm welcome to Dr Shekhar Mande on the Board
of the Company. I thank all our employees for their commitment towards the Company. I also
extend my deepest gratitude to all our stakeholders for their trust and confidence in us
and hope to have their continued support in our journey towards a sustainable future.
Warm Regards, |
| N Chandrasekaran |
Chairman |