India: Tata Steel sees rise in production, sales in FY'24

Tata Steel Limited (TSL), one of the prominent Indian steel producers, achieved its highest-ever production volumes at 20.8 million tonnes (mnt) in fiscal year 2023-24 (FY'24) with a y-o-y growth of 4.5%. The manufacturer's sales volumes also rose 5.6% y-o-y to 19.9 mnt in FY'24. On the capital expenditure (capex) front, the company spent INR 4,850 crore in Q4 (January-March, 2024), with an aggregate of INR 18,027 crore in FY'24.

Project updates

The phased commissioning of the 5 millon tonnes per annum (mntpa) expansion at Kalinganagar, which had been initiated Q3FY'24 (October-December, 2023), is progressing at a smooth pace, with the commencement of production at the steel melting shop 2 (SMS2).

In Q3, commissioning of the 6 mntpa capacity pellet plant at Kalinganagar and that of the 2.2 mntpa cold rolling mills (CRM) complex had also been accomplished, along with the production of the full hard cold rolled steel (FHCR) coils from the latter.

The phase 2 expansion of Kalinganagar plant would entail another INR 27,000 crore wherein focus would be on both upstream and downstream integration during the FY'25.

Highlights:

Sales volumes get boosted by BPR, auto sectors: The company's sales increased 12% y-o-y riding the branded products and retail (BPR) segment and 8% y-o-y in the automobile sector in FY'24. Supplies towards industrial products and projects (IPP) also increased 6% y-o-y. However, exports were slashed by 35%.

Thus, the standalone earnings before interest, tax, depreciation, and amortization (EBITDA) of the company demonstrated an annual growth of 10%, reaching INR 31,057 crore in FY'24, compared to INR 28,142 crore in the previous fiscal. In Q4, the figure was recorded at INR 8,261 crore, close to the previous quarter's INR 8,302 crore.

The company expects the net sales realisations to improve by INR 300-350 in Q1'FY25 as compared to the previous quarter.

Material costs decline: The material costs declined by INR 6,000/t owing to lower coking coal costs and lesser purchases of pellets from outside. Raw material prices moved lower during the quarter; Coking coal prices declined nearly 23% to around $250/t levels while iron ore prices moved similarly to $100/t. Looking ahead, the company anticipates a decrease in coking coal prices by $10/t in the forthcoming quarter.

Planned maintenance: The company intends to execute maintenance on blast furnace G in January 2025 to facilitate relining.

Business update: The company has inaugurated 7 new construction service centres across India, effectively increasing the total number to 33.

In addition to this infrastructural growth, the company has successfully launched several new products tailored to meet specific customer segment needs. These innovations include bright finished wheel rim for two-wheelers, CR grades for automotive applications, cabin top for three-wheelers, two-wheeler fuel tank (galvannealed), 7mm and 9mm Fe550D air-cooled rebar for SmartFab etc.

Note: All figures are mentioned on standalone basis (include Tata Steel Long Products Limited, Tata Steel Mining Limited, Tata Metaliks Limited, Tinplate Company of India Limited, S&T Mining and Neelachal Ispat Nigam)