T.V. Narendran says Tata Steel's expansion pace is 'just right' amid market complexities

T.V. Narendran, chief executive officer & MD, of Tata Steel has said that the pace of growth at Tata Steel is "just right" for the current market. Commenting on remarks on Tata Steel's "slower than desired" pace in taking growth projects in India, Narendran, during an analyst call on the company's Q2 FY25 results today, says the steel major's approach to capital projects is more on doing the detailed engineering, and getting the environment clearances ahead of going to the board for approvals.

"Because that gives us more certainty in the execution. Oftentimes, we take board approvals and then take longer than planned on environment tolerance, etc. We have a public hearing for Neelachal expansion on November 29, that is for expanding it to 10 million tonnes, once we have EC (environment clearance) on that, we can progress fast."

The Tata Steel MD and CEO says a lot of the engineering work is going on and that the upcoming projects will be announced after the board's approval. "The board has already approved expenses to be incurred for the preliminary work. So after this, the focus will be on the Neelachal expansion, which will take it from 1 to 5 million tonnes, after that we have the Kalinganagar from 8 to 13, and the Bhushan plant option from 5-7."

Narendran says some of the work is already going on about these two assets. "After Kalinganagar, two facilities are coming on stream -- one is the Ludhiana steel plant, which is a 0.8 million tonne steel plant, which will be ready by 2026 and in Jamshedpur, we are setting up half a million-tonne mill to service downstream of Usha Martin steel business, which we acquired."

He says that'll cater to the high-end forging quality requirements of passenger car vehicles and two-wheelers. "We already service commercial vehicles."

In the global context, the Tata Steel MD and CEO says the global operating environment remains complex, with key regions facing subdued growth. He says macro-economic conditions in China continued to weigh on commodity prices including steel. In India, steel demand continues to improve but domestic prices are under pressure due to cheap imports, he adds.

On Tata Steel's Q2 performance, Narendran says it has delivered "consistent performance", with India deliveries at 5.1 million tons for the quarter and 10.1 million tons for the half year.

He says Tata Tiscon Q2 deliveries surging 20% YoY and the commissioning of the 5 MTPA blast furnace at Kalinganagar were the key highlights of the second quarter. "This coupled with the 2.2 MTPA CRM complex will further improve our product mix."

On the closure of its blast furnaces in the U.K., Narendran says talks are on with the U.K. government to transition to green steel. "We remain fully committed to supporting affected employees and have offered the best ever package of support in Tata Steel UK."

In the Netherlands, Narendran says subdued steel prices weighed on Tata Steel's performance in Q2, but adds that the company is undertaking pilot projects to avoid or convert captured carbon emissions.

He adds that the company also achieved 20% diversity for the first time in India.

The steel major's profit came in at ₹833.45 crore during the quarter ended September (Q2FY25), helped by lower expenses, against a ₹6,196.24 crore loss in the year-ago period. Tata Steel Ltd reported consolidated EBITDA of ₹6,224 crore for the July-September quarter, with an EBITDA margin of around 12%. The revenues for H1 FY25 were ₹1,08,676 crores, while the revenues for the July-Sept 2024 quarter stood at ₹53,905 crore. Tata Steel's net debt stands at ₹88,817 crore as of September 30, 2024. The company's India revenue was ₹32,660 crore for the quarter, with EBITDA at ₹6,912 crore and an EBITDA margin of 21%.