Tata Steel on Tuesday said it had recorded a consolidated net profit of Rs 758.84 crore in the July-September quarter of the 2024-25 fiscal, in sharp contrast to a net loss of Rs 6,511.16 crore in the same period of the preceding fiscal. Strategically cutting costs at the company level to reduce expenses from Rs 55,853.35 crore to Rs 52,331.58 crore helped the steel giant squeeze into profitability despite a slight dip in total income, which fell to Rs 54,503.30 crore from Rs 55,910.16 crore in Q2 of FY23.
Challenging Global Environment
The world market of steel faced setbacks due to subdued economic conditions, especially in countries like China, where slower growth rates have compelled commodity prices, including steel, to fall.
Demand in the Indian economy is strong. However, the market was also a victim of the assault of cheaper imports that are piling pressure on domestic prices for steel.
At such a juncture, bold steps taken toward green steel initiatives will continue. The company recently agreed to a grant funding agreement with the UK government to support it in its transition towards green steel-making. Decommissioning the last operating blast furnace at its Port Talbot site provided scope for new-generation green steelmaking technologies under the change. Besides these projects in Europe, the firm is running pilot capture and conversion projects aimed at reducing carbon emissions from its core business sites in the Netherlands.
Expansion and Upgrades in India
Domestically, Tata Steel has commissioned India’s largest blast furnace at the Kalinganagar plant in Odisha. With both the furnaces ramped up immediately, Tata Steel’s total crude steel capacity will reach 26.6 MTPA. Further, Tata Steel is designing an electric arc furnace plant at Ludhiana with an annual capacity of 0.85 MTPA to support its green steel objectives.
European Performance and Financial Position
The UK business of Tata Steel continues to be affected. It booked revenue of £600 million for the quarter from the region, and the EBITDA loss was at £147 million. The group’s producing capacity was at 0.39 million tons, whereas the volume delivered was 0.63 million ns. The Netherlands operations proved more responsive. Here, the revenue figures were reported as £1,300 million and EBITDA had turned positive to the tune of £22 million with liquid steel production happening at 1.66 million tonnes and deliveries at 1.5 million tonnes.
Tata Steel has also allocated massive amounts of capital expenditures for the ongoing as well as future projects. In the last quarter, it incurred Rs 4,806 crore, and so far for the fiscal year, it incurred a cumulative Rs 8,583 crore. The net debt of the company is at Rs 88,817 crore, whereas the liquidity position is healthy enough at Rs 26,028 crore, consisting of cash and cash equivalents at Rs 10,575 crore.
Conclusion
This would amount to a return to profitability as testimony of the resilience and strategic approach of Tata Steel in trying times. Challenges in terms of global economic factors and low-cost imports notwithstanding, the focus for the company is on sustainability and capacity expansion, at least in India, which also brings forth the message that there is a long time ahead for growth. Towards a greener future, steps taken by Tata Steel are a step in the right direction as mileposts for the direction that the steel industry should be headed for a sustainable future.
Source: PTI