- Consolidated Revenue (Q4 FY '24): INR 58,687 crores
- Consolidated EBITDA (Q4 FY '24): INR 6,631 crores
- EBITDA Margin (Q4 FY '24): 12%
- Stand-alone EBITDA (Q4 FY '24): INR 8,190 crores
- Stand-alone EBITDA per ton (Q4 FY '24): INR 15,107 per ton
- Stand-alone EBITDA Margin (Q4 FY '24): 22%
- Consolidated Revenue (FY '24): INR 2,29,171 crores
- Consolidated EBITDA (FY '24): INR 23,402 crores
- Consolidated EBITDA Margin (FY '24): 10%
- Stand-alone EBITDA (FY '24): INR 31,000 crores
- Stand-alone EBITDA per ton (FY '24): INR 15,573 per ton
- Stand-alone EBITDA Margin (FY '24): 22%
- Operating Cash Flows (Q4 FY '24): INR 7,394 crores
- Operating Cash Flows (FY '24): INR 20,300 crores
- Capital Expenditure (FY '24): INR 18,207 crores
- Gross Debt (FY '24): INR 87,082 crores
- Net Debt (FY '24): INR 77,550 crores
- Group Liquidity (FY '24): INR 31,700 crores
- Highest Ever Crude Steel Production: 20.8 million tons
- Deliveries: 19.9 million tons
- Domestic Deliveries Growth: 9% year-on-year
- Automotive Volumes Growth: 8% year-on-year
- Tata Tiscon Growth: 15% year-on-year
- Retail Brand Tata Tiscon Annual Volume: 2 million tons
- Construction Centers: 33 pan-India
- Netherlands EBITDA Loss (Q4 FY '24): GBP 27 million
- Netherlands EBITDA Loss (FY '24): GBP 368 million
- UK EBITDA Loss (Q4 FY '24): GBP 34 million
- UK EBITDA Loss (FY '24): GBP 364 million
Release Date: May 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tata Steel Ltd (BOM:500470, Financial) achieved the highest ever crude steel production of 20.8 million tons and deliveries of around 19.9 million tons.
- Domestic deliveries were up 9% year-on-year, leveraging persistent demand in the domestic market.
- Automotive volumes grew by 8% year-on-year, driven by higher deliveries of hot-rolled and cold-rolled coils to automotive OEMs.
- The well-established retail brand, Tata Tiscon, witnessed a 15% year-on-year growth and crossed 2 million tons on an annual basis.
- The company is committed to sustainability, with initiatives like zero effluent discharge at two sites and the use of biofuel blends for shipping.
Negative Points
- Global steel prices have moderated due to elevated exports and geopolitical tensions, impacting overall profitability.
- Tata Steel Netherlands faced an EBITDA loss of GBP 368 million in FY '24 due to operational issues and delays in ramping up the cold rolling mill.
- Tata Steel U.K. reported an EBITDA loss of GBP 364 million in FY '24, with significant restructuring costs expected in the near term.
- The company’s net debt increased by INR 9,700 crores to INR 77,550 crores, despite strong operating cash flows.
- The closure of the Sukinda mine resulted in a one-time cost of INR 500 crores, impacting financial performance.
Q & A Highlights
Q: First question on the U.K. transition. Just wanted to understand, in the notes to accounts, you mentioned the current agreement with the U.K. government is nonbinding. And you still need to sign the gross funding arrangement and have the final investment decision. Now U.K. is heading into elections in July and you've indicated you want to shut down the blast furnace in June. So how does the signing of the investment -- final investment decision before elections, after elections impact your plans? And would you still go ahead with the closure even if the gross funding agreement and final investment decision is not made by then?
A: Yes, Koushik, just...
Koushik Chatterjee - Tata Steel Ltd - CFO & Executive Director: Yes. Satyadeep, so while the GFA term sheet was nonbinding, but we are at an advanced stage as far as the grant funding agreement is concerned. That is something that is being finalized between the U.K. government and us. And as I said, it will run its own course in terms of getting signed in the next maybe a few weeks or so. The elections will -- are a political event, which does not affect the company's plan on moving ahead with the project. This transition is very critical and very important. As I mentioned in my commentary, we are on course as far as the planning for the decommissioning of the heavy end is concerned. The first 1 will -- the blast furnace 5 will be taken down in the end of June. The coke ovens is already being wind down earlier than planned because of operational issues. And therefore, we are on course as far as our plan for the decommissioning of the heavy end is concerned. We have also done extensive 7-month consultation, both informally and formally with the Steel Committee, which is the multi-trade union platform. And we have concluded on the consultation at the national level. And that is something which is an important bit, which is what we announced some time earlier. And therefore, it is on execution phase as far as the project is concerned. And this year, we plan to spend our initial part of the capital in terms of the site preparation and the other engineering costs, as I mentioned in my commentary.
Q: Just want to make sure I understood correctly. Even if the GFA and final investment decision is not made by June and no matter what happens, you'll still go ahead and close the blast furnace in June, right? Is that understanding correct?
A: Yes. So the grant funding agreement, it is not a contingent issue. Grant funding agreement is, as I said, is in advanced state of finalization. It will get done. And as far as the decommissioning is concerned, that is as per plan that we have announced.
Thachat Narendran - Tata Steel Ltd - Chief Executive Officer, Managing Director, Executive Director: I think Satyadeep, if I can supplement what Koushik said, see the closure of the blast furnace and the winding down of the heavy end was something that we've been talking about for quite some time given the financial performance of the U.K. business. The grant funding agreement and the agreement with the U.K. government is to invest in a new facility. So I think we had anyway said earlier also that the current operating model is not workable for us in the U.K. because of the bleed and the bleed has continued, it has increased. So I'm kind of saying that both coming together is ideal, so that we can build the electric arc furnace as we want to. But given the losses that we have, closure is going to happen anyways.
Q: Secondly, on the equity infusion into T S Global Holdings. I understand it's about USD 2 billion, maybe $1 billion is for the capital contribution for U.K. transition. The remaining, what was the need for India business to come to the rescue in a way to finance the debt that is coming due in the U.K. business? Tata Steel Europe have had the ability to do that on its own balance sheet. Just want to understand the rationale for this resolution, Board approval for this equity infusion?
A: So Satyadeep, I think when you look at Tata Steel, I think all of you look at Tata Steel consolidated. So when you look at Tata Steel consolidated, the entire debt is at Tata Steel consolidated debt. There are assets inside and outside. The debt which we are talking about is actually a Tata Steel debt in foreign currency in Singapore. So the whole announcement, I think we had an inkling that it will be read wrongly. The fact is this is largely for refinancing of our scheduled loans that are coming up during the year. And there is some part of it which will go to the U.K. for funding its operating cost in the first half. And thereafter, we expect U.K. to -- apart from the restructuring cost, to get into a state where from an operating point of view, it will not need capital. But large part of this funding is actually for repayment of debt.
Q: So this -- Koushik, this repayment of debt is for the foreign currency loan that you mentioned is at TS Global Holdings?
A: That's correct. That's correct.
Satyadeep Jain - AMBIT Capital Private Limited - Analyst: It has been possible for Tata Steel to provide letter of comfort, again, that the company had done in the past to be able to refinance the debt instead of equity infusion?
Koushik Chatterjee - Tata Steel Ltd - CFO & Executive Director: So we will -- it is also -- you have to look at holistically. From a tax point of view also, if I look at it, we are looking at the India balance sheet to be the 1 which is most -- it will be the most tax efficient. So from both a tax point of view as well as from the entity, which will have the most leverage will effectively be the Tata Steel India business. And we don't want to keep debt outside and go through the fluctuations. I think both U.K. and Netherlands will be cash self-sufficient and U.K. post the project will be a cash self-sufficient entity. That's our strategy, that's our vision to drive. But this debt that is there, which was a debt from -- on Tata Steel. It was done in Singapore for different reasons. As you know, there are -- they were withholding tax issues, et cetera. But it is actually a Tata Steel debt, and that's why it's happening like that. There is no use giving letter of comfort and raising debt overseas and then meeting the debt servicing requirements from India.
Q: Sir, I have 2 questions. One, because we are on the verge of commissioning our KPO Phase 2. So is it possible for you to give any volume guidance for it? Because last time we gave 0.7 million ton,
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
