Tata Steel reports consolidated EBITDA at Rs 6,271 crores; Maintains Investment grade credit metrics

Mumbai, October 31, 2022

Highlights:

• Consolidated Revenues stood at Rs 59,878 crores and consolidated EBITDA at Rs 6,271 crores, with an EBITDA margin of ~10%.
• Consolidated Profit after tax stood at Rs.1,297 crores.
• Net debt of Rs.71,753 crores, Net Debt to EBITDA at 1.37x and Net Debt to Equity at 0.63x.
• The 6 MTPA Pellet plant will be commissioned in 3QFY23 and will be followed by the Cold Roll Mill complex in phases. The 5 MTPA expansion at Kalinganagar is on track for commissioning by end FY24.
• Neelachal Ispat Nigam Limited’s blast furnace was restarted in October, within 3 months of completion of the acquisition and is being ramped up.
• Tata Steel Board has approved the amalgamation proposal of seven listed and unlisted entities into Tata Steel, a value accretive merger with multiple benefits.
• Work has commenced on setting up 0.75 MTPA Electric Arc Furnace (EAF) in Punjab, which will leverage the growth in the construction segment and is an important milestone in our transition to net zero.
• India¹
  • Deliveries were higher by 21% QoQ and 7% YoY primarily driven by record domestic deliveries. Turnover was Rs 34,114 crores.
  • Reported EBITDA stood at Rs.4,907 crores, which translates to an EBITDA per ton of Rs 9,986.
• Europe operations –
  • Deliveries were lower on QoQ basis, in part due to seasonal factors and subdued demand in Europe. Turnover was £2,307 million and EBITDA was £199 million, which translates to an EBITDA per ton of £106.
  • Management Comments:

    Mr. T V Narendran, Chief Executive Officer & Managing Director:

    “Concerns about slowdown in key economies, persisting geopolitical issues coupled with seasonal factors led to a volatile operating environment. Despite these headwinds, Tata Steel registered best ever domestic sales in India enabled by a strong product portfolio and an extensive distribution network which services end to end requirements in chosen segments. Our 6 MTPA pellet plant at Kalinganagar is coming on stream shortly and will deliver significant benefits by reducing costs. We will begin the phased commissioning of the 2.2 MTPA state of the art Cold Rolling Mill complex and the 5 MTPA capacity expansion at Kalinganagar thereafter. Despite multiple challenges, we were successful in commissioning Neelachal Ispat Nigam Limited (NINL) within 3 months of acquisition and the ramp-up is progressing well. I am happy to announce that we have commenced work at our new 0.75 MTPA Electric Arc Furnace (EAF) at Punjab, strategically located in proximity to the market and the scrap generating auto hub in North India. We will set up more EAFs in the country, which will enable capacity augmentation and along with NINL expansion, will drive growth in our high margin retail business. Our EAF expansion is an important milestone in our sustainability journey and part of the multiple initiatives we are pursuing to achieve net zero by 2045. Further, in Netherlands, Tata Steel along with its customers has embarked on the journey to be carbon neutral through Zeremis® – a flexible solution that lets you choose the carbon emission intensity reduction”

    Mr. Koushik Chatterjee, Executive Director and Chief Financial Officer:

    “Globally, gross steel spreads declined amidst concerns about global recovery and elevated input costs including energy. Our Consolidated revenues for the quarter stood at Rs 59,878 crores and our consolidated EBITDA stood at Rs 6,271 crores, with Consolidated EBITDA margin of 10% and Standalone EBITDA margin of 16%. Utilisation of high-cost inventory of raw material and steel coincided with drop in realisations to result in margin decline across geographies. Consolidated PAT for the quarter stood at Rs 1,297 crores. In India, Standalone revenue stood at Rs 32,245 crores and was broadly similar on QoQ basis due to higher volumes. Standalone EBITDA was Rs 5,135 crores. In Europe, our EBITDA stood at £199 million, which translates to an EBITDA per ton of £106. The operating environment though should gradually improve in 2HFY23 on government measures and restocking. The margins should benefit across geographies from gradual recovery in Indian markets and favourable movement in raw material prices, especially Coking coal. Energy costs in Europe continue to remain a key watchpoint. We continue to remain focused on cost optimisation, operational improvements and working capital management to maximise cashflows. Our liquidity position continues to be strong and credit metrices remain at Investment grade levels. The proposed merger of seven listed and unlisted entities to be value accretive by enabling faster growth, optimal resource use and will provide greater liquidity to shareholders”

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