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Informist, Tuesday, Jan. 28, 2025

By Avishek Rakshit & Noopur Bhandiwad

KOLKATA – Expecting its average sales realisations in India and Europe to remain muted in Jan-Mar, Tata Steel is pinning its hope on the Indian government to enforce some form of anti-dumping duty to ensure profitable growth for private steel companies in the country.

Speaking to sector analysts after declaring its financial results for the December quarter, Managing Director and Chief Executive Officer, T.V. Narendran said, "While other countries have safeguard duties, anti-dumping duties, we also need to move fast because otherwise the damage is already done. We were expecting it to happen in January. Let's see, maybe something will happen in the budget."

The top official from the country's largest steel producer further said that the Indian government needs to put in place such protectionism measures as demand alone cannot be the growth driver for the manufacturing sector, particularly steel. Steel companies need to invest their cash flows into the business for growth, he reasoned.

In the face of cheaper alternatives to Indian steel, primarily from China, Indian steelmakers have been feeling the heat of demand partially shifting over to the cheaper imported steel. As a result Indian steelmakers are losing business within India.

According to data from the US Department of Commerce, in 2023, India imported 9.6 million tonnes of steel, which is a 42.3% increase from 6.8 million tonnes in 2022. Data from the Indian steel ministry also highlighted that during 2023-24 (Apr-Mar), India imported 8.3 million tonne of steel and during Apr-Oct of the ongoing financial year, imports were 5.8 million tonne.

Narendran said that Tata Steel's average price realisation from sales in India is expected to remain flat on a sequential basis, but it is expected to drop by 60 pound sterling a tonne in the UK, and also decrease in the Netherlands.

"Unless there's something very significant in the budget or on safeguards which comes immediately, then there should be an upside. But otherwise, at the minimum, we see it should be flat," Narendran said. "When I look at international prices, I'm not expecting too much of a pickup because nothing is changing very significantly in China from an economic point of view. I don't see international prices improving very significantly, at least in the next one or two quarters."

However, production costs are expected to be benign in the face of muted price realisations. In India, cost of coking coal – a prime raw material to make steel -- is expected to be lower by $10 a tonne sequentially during Jan-Mar, and down $20 sequentially in the Netherlands, Narendran said.

Executive Director and Chief Financial Officer, Koushik Chatterjee said the company has taken measures to keep costs under check and bring down fixed costs, especially due to muted sales.

During Oct-Dec, Tata Steel posted its best ever quarterly sales volume at 5.3 million tonnes, up 8.2% on year and nearly 4% sequentially, but consolidated revenue from operations declined 3% to INR 536.48 billion, from INR 553.12 billion in the year-ago quarter. It was the 10th consecutive quarter of year-on-year decline in revenue from operations for Tata Steel.

Talking about its operations in Europe which faced the double whammy of muted steel prices and demand, Chatterjee said that the company is expecting its operations in the UK, which is under a structural transformation phase to move over greener technology, to break even in the next few quarters, and the company had undertaken cost optimisation measures there.

Talking about adoption of green energy, Narendran said the company would need government support in Europe. It is in talks with the Netherlands government for monetary support and a decision is likely in the next 4-5 months.

The company is expected to complete its plant expansion in Kalinganagar in Odisha in the next 12 months, and is also stepping up capacity at its Ludhiana plant in Punjab besides other projects. The major part of investment for the Ludhiana plant is expected to happen in FY26.

Tuesday, shares of Tata Steel closed 1.8% higher at INR 128.62 on the National Stock Exchange after the company not only beat the Street's projections on its Oct-Dec financial performance, but also reported a profit as against an expectation of a loss from a large chunk of brokers. End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Deepshikha Bhardwaj

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