Tata Steel has managed to wade through the swamp of global uncertainty and domestic slowdown by cutting costs and improving efficiency. The unrest in the Indian borders has further complicated the economic outlook of the country. TV Narendran, MD and Koushik Chatterjee, executive director and chief financial officer, Tata Steel spoke to businessline on the way forward:

 How do you think the current war-like situation in India-Pakistan border is going to impact Tata Steel and the overall steel sector in the country?

Narendran: It will have limited impact because it was for a brief period. If the situation prolongs then I’m sure it would have an impact. We are building an electric arc furnace in Ludhiana. So we had to stop activity for a few days because there were blackouts. Some of the migrant workers went back home. So that was the only direct disruption we faced. The Ludhiana project will not be delayed as disruption was there for just a few days. This should not make a difference. I do not see it as a big issue.

Do you see private capex slowing down?  

Private capex depends on good demand, good capacity utilisation and decent profitability so that there are cash flows available to invest. Steel industry was actually leading the private sector capex in India. The industry was doing ₹10,000-₹20,000 crore of capex. This was at risk if the safeguard duty action was not taken and this was our representation to the government. We cannot let somebody else’s domestic problem create domestic problems for us. So in private sector capex, it is not that good demand necessarily means good capacity utilisation and this will automatically trigger capex. It also has to have decent profitability.

How do you see steel prices and raw material given the current situation?

For the June quarter, we are guiding steel prices at ₹3,000 a tonne higher than Q4. In Europe, the spreads will be about euro 20-30 better. For coal, we are guiding about $10 lower per tonne compared to last quarter. In Europe, it will be about $8-9 higher than the previous quarter, but these are at consumption levels. However, in last few week, coal prices have gone up by about $20 a tonne. So that will impact us maybe in the September quarter not so much in the June quarter. So we are seeing a commodity prices stabilising. We see no major disruption in any critical raw materials. In fact, those disruptions happened 2 years back when we had the Russia, Ukraine situation and gas prices shot up and electricity prices went up in Europe. So compared to that, there’s relative stability.

Tata Steel plans to invest ₹21,000 crore infusion in UK business this fiscal? How do you plan to fund it?

Chatterjee: We are not investing, it is actually debt repayment overseas through onshoring of debt into India because it is lot more easier to service the debt from the source of the cash flows, reduce foreign currency volatility and also taking advantage opportunistically on the interest rate.

We are taking part of the debt in UK, Tata Steel Europe and Netherlands in India. It is orientation of the debt and there is some part of it which is for project capex in Tata Steel UK which we are going to support from here because that is the understanding. UK government will fund 40 per cent and rest from India. Essentially, it will through internal cash flows and refinancing. We will raise the debt in India. The overall debt will not increase but actually it is targeted to come down.

Narendran: Netherlands traditionally has been self-sufficient. It is just that they had two bad years. Now they are cash flow positive. If they need support, it will be only when we agree with the government on the transition plan along with the grant funding from the government. As far as UK is concerned, support will be more for that pound 1.25 billion project out of which pound 500 million will come from government and rest from us. The loss funding, part of it, which was mainly in UK, hopefully will be a thing of the past after this year.

What will be your capex plan for this year?

 Chatterjee: It is about ₹15,000 crore of which about 75-80 per cent will be in India, about ₹400-500 crore in UK sustenance capex, about ₹1,900 crore on decarbonisation project in Netherlands. So the rest of it is in India and the bulk of it is in completion of the Kalinganagar project and electric arc furnace project at Ludhiana and in some of the new downstream facilities.

 What is the progress in talks for grants from the Netherlands government?

Chatterjee: Since it is taken up by the government in Netherlands as a unique demonstration project there are multiple stakeholders including the government, Parliament, European Commission and provincial government. It addresses issues on decarbonization, environment, health all in a composite manner. So we just have to go through the process. The European Commission is also engaged with the Dutch Government in the framing of the configuration. There is also a fair bit of policy changes in Netherlands on account of this project. The policy changes may take time. Given that the Dutch Government is also accelerating this process, we are hopeful that by this year we will get to the form an understanding with the Netherlands government with the support of the European Commission.

Published on May 13, 2025