Tata Steel's India production and sales volume fall in Q1 FY'21

Tata Steel reported a 37% q-o-q drop and a 34% y-o-y drop in output at its Indian operations to 2.99mn t in Q1 FY'21.

Sales volume in India fell by 28% q-o-q and 26% y-o-y to 2.92 mn t in Q1 FY'21.

In Q1 FY'21, exports accounted for 50% of total sales volume as overseas sales were increased significantly by tapping into new markets to offset the slow domestic demand.

Reasons behind the fall in production and sales figures:

1. Low capacity utilization- With the outbreak of COVID-19 in early March and subsequent announcement of a lock-down, capacity utilization of our upstream facilities was adjusted to about 50% level in April while our downstream units were closed.However, the company started to gradually ramp up production later in the quarter and reached an 80% utilization level by the end of Jun'20.Downstream facilities have also been restarted and are being ramped up progressively.

2. Weak domestic demand- Domestic sales fell in April and May as lockdown in India led to the closure of construction and manufacturing activities. Sales have improved significantly in June as economic activity resumed in India. With the continued opening up of economic activity and the improvement in domestic demand, the proportion of domestic sales will increase from Q2 FY'21.

3. Mobility restrictions- Movement of goods and labour was severely impacted during the lockdown period and continues to hinder logistical operations as many workers who went back to hometowns over the past couple of months have not come back to work yet.

Tata steel production and sales figures in Q1FY21

Quantity in mn t
Source: Company report, Compiled by SteelMint