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Informist, Thursday, Aug 1, 2024

 

--Tata Steel: To seek board OK to add capacity at Neelachal this yr

--CONTEXT: Tata Steel mgmt's comments in post-earnings investor call

--Tata Steel: Predatory Chinese pricing bad for Indian steel industry

--Tata Steel:UK, Netherlands net debt 600-800 mln pound sterling each

--Tata Steel: Netherlands operating costs may be stable by Oct-Mar

 

By Rajesh Gajra

 

MUMBAI – Tata Steel Ltd guided for a reduction in the net realisation for its India operations in the September quarter by 1,500 rupees per tn compared to the June quarter, the company's management said in a post-earnings investor call today. The company said growth in the net realisation from its UK operations will likely be flat on quarter, while its Netherlands business may see a sequential reduction of 60 pound sterling.

 

Coal costs on consumption basis in India in Jul-Sep will likely be $15 per tn lower than that in Apr-Jun, while it will be $26 per tn lower in the Netherlands, the company's management said. Coal is not relevant for the UK going forward, it added.

 

In the June quarter, Tata Steel's India delivery volume of crude steel declined 8.9% sequentially, leading to a revenue decline of nearly 10%. The company's volume in the Netherlands increased 6.3% on quarter, with revenue increasing 1.9%. Tata Steel's volume and revenue growth from UK operations was flat sequentially in Apr-Jun.

 

Tata Steel's consolidated earnings before interest, tax, depreciation, and amortisation, or EBITDA in Apr-Jun was driven by slightly higher realisations in India partly offset by a drop in UK's realisations, apart from lower sales volume. The company's consolidated EBITDA, adjusted for changes on account of foreign currency movement on inter-company debt and receivables, declined 0.3% sequentially to 69.50 bln rupees.

 

The raw material costs at the Netherlands operations were higher in the June quarter over the previous quarter due to a rise in coking coal and iron ore consumption costs. This weighed on the consolidated EBITDA of the company. In today's investor call, Tata Steel's management said that the operating costs in the Netherlands were trending down and will likely be stable in the December or March quarter.

 

Tata Steel UK's EBITDA loss expanded to 9.55 bln rupees in Apr-Jun from 3.88 bln rupees in Jan-Mar. In India, the adjusted EBITDA fell 17.7% on quarter on the back of lower volumes and prices.

 

Cheaper steel imports posed a challenge for the company in its India sales. The company's management said in today's investor call that predatory pricing by Chinese exporters was detrimental for the Indian steel industry. It said that Chinese exporters were selling steel at below the cost price and the last time such a phenomenon was seen was in 2020.

 

Tata Steel's consolidated net debt rose to 821.62 bln rupees as of Jun 30 from 775.50 bln rupees on Mar 31. In reply to a query in today's investor call, the company's management said that the net debt of its UK and Netherlands operations stood at 600-800 mln pound sterling each.

 

For its India capacity expansion plans, the company will seek the board's approval for capacity expansion at its Neelachal unit later this year, the management said today. The company set a target of 40 mln tn per annum capacity in India in the next few years from 21 mln tn per annum currently.

 

Tata Steel spent 37.77 bln rupees overall on capital expenditure during the June quarter. During this period, the company made progress in phased commissioning of the 5-mln-tn-per-annum capacity expansion at Kalinganagar and said the blast furnace will be launched in September.

 

Today, shares of Tata Steel ended 1.4% down at 163.06 rupees on the National Stock Exchange.  End

 

Edited by Tanima Banerjee

 

 

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