Tata Steel, one of the largest steel-makers in the country, has undertaken “various trials”, including injecting hydrogen in the blast furnace to reduce emissions and have also initiated measures to replace around 379 megawatts of coal-based power with renewable energy, TV Narendran, CEO and MD, Tata Steel said.

The company, he said, will continue to focus on its capex, nearly ₹11,000 – ₹12,000 crore in India for FY24 and a total of ₹16,000 crore globally this fiscal. India capex includes the 5 million tonne per annum (mtpa) expansion at Kalinganagar.

Narendran said, the capex will help grow the company’s leadership position in auto and “grow presence in the value added segments such as oil and gas, solar, etc”.

Compared to the company’s Dutch plant that has a carbon emission of 1.8 tonnes per tonne of steel produced, emission at Tata Steel’s Jamshedpur plant is at 2.11 tonnes per tonne of steel produced.

“Our investments are strategically focused on business sustainability and growth. Tata Steel is committed to being net zero by 2045 and multiple initiatives are already underway, calibrated to each operating location,” he said at the analyst call.

Kalinganagar ramp up

In Kalinganagar, which the company is prioritising, the cold rolling mill and pellet plant have already started working.

The galvanising and annealing lines are likely to be commissioned over the next few quarters. The blast furnace is expected to come on by Feb – March and steel melt shop expansion is also being carried out.

“In the past, we have also put deleveraging ahead of capex, and by which, we have also slowed down our capex, like Kalinganagar, which in hindsight has actually not helped us,” Koushik Chatterjee, ED and CFO, Tata Steel said.

Other Investments

Investments in Neelachal Ispat Nigam and the upcoming electric arc furnace in Punjab will “drive retail presence”, the company said.

Neelachal Ispat Nigam Limited has ramped up operations and is currently running at a run rate of approximately 1 mt of crude steel plus pig iron on an annualized basis. Post feasibility studies, the company plans to expedite the expansion.

Focus is also on growing the downstream portfolio across wires, tubes, ductile iron pipes and tinplate.

In tubes, the company has recently commissioned two new mills and this is expected to increase its capacity to 1,.3 mtpa (30 per cent increase) over the present 1 mtpa.

Debt reduction

“We are keen to prioritize growth in India and are recalibrating our deleveraging targets.....We are now looking to continue to deleverage,” he said. Debt reduction continues to be another priority at least for the “next couple of years”.

Volatility in steel markets has also impacted working capital and cash flows. Net debt currently stand at ₹71,397 crore.

There has been a build-up of around ₹2,500 crore in Q1FY24 and “this was more due to the price effect”. Working capital days have remained stable at around 34 days compared to about 37 days in Q4FY23.

Around ₹9,200 crore through various working capital measurements have been released.

“Overall, the working capital and cash flows, on account of higher capex have led to an increase in the net debt of about ₹3,600 crore, on a quarter-on-quarter basis. Finance costs are broadly stable on a q-o-q basis,” Chatterjee said.

Net debt-to-EBITDA is about 2.9, and net debt-to-equity is 0.69.

The group liquidity was ₹30,500 crore, that included ₹19,000 crore of cash and cash equivalent.

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