Mumbai, June 29, 2020
The COVID-19 outbreak has led to an unprecedented health crisis and has disrupted economic activities and global trade while weighing on consumer sentiment. Consequently, global steel demand is expected to be sharply lower in 2020 before a meaningful recovery in 2021.
Government of India imposed a stringent nationwide lockdown with effect from 25th March 2020 severely impacting manufacturing activities. Steel and Mining were exempt from the lockdown measures, albeit subject to certain guidelines. However, steel demand was affected as key steel consuming sectors struggled to operate amidst weakening economic activities, working capital constraints, shortage of manpower and logistical issues. In Europe, the outbreak of Covid-19 has further accentuated the sustained weak steel demand. Share of steel imports to total consumption in EU continues to remain at elevated levels which is a cause of concern. After witnessing a decline in steel demand growth in 2019, EU expects a steel demand recovery only in 2021.
At Tata Steel, our first and foremost priority continues to be the health and safety of our employees and the communities in which we operate. We are focused on running operations safely and efficiently to service our customers. We are also focused on liquidity management to face any future disruption in business conditions.
With the phased removal of the lockdown restrictions in India, our upstream steel making operations have been ramped up and are currently operating at about 80% utilization levels. Our downstream units have reopened and are steadily ramping up. There are early signs of a recovery in steel demand on the back of increased spending on infrastructure projects as well as rural demand. In Europe, Tata Steel Europe continues to operate at about 70% utilization level. Key steel consuming sectors such as automotive and construction sector continue to be adversely affected, though demand for packaging material has seen a sharp upsurge.
Mr. T V Narendran, CEO & Managing Director:
“FY20 has been a challenging year. The Indian economy slowed down in the first half with key steel consuming sectors like automotive contracting sharply. While the economy began recovering in the second half, the outbreak of Covid-19 in end March led to unprecedented disruption and heightened economic uncertainty. We have recalibrated our operations in line with the evolving business environment and are focused on conserving cash while actively de-risking the business.
While deliveries in India were marred by the nationwide lockdown in late March 2020, margins improved on the back of stronger performance in the early part of the quarter. Both our acquisitions, Tata Steel BSL and Tata Steel Long Products continue to deliver improvements in operating KPIs which has translated into better profitability. Tata Steel Europe showed a turnaround in performance with positive EBITDA for the quarter.
While there will be a sharp drop in volumes in 1QFY21, we are seeing early signs of recovery and remain poised to leverage our position on normalization of business conditions.”
Mr. Koushik Chatterjee, Executive Director and CFO:
“Given the heightened uncertainty due to the Covid-19 pandemic, we are focused on conserving cash and ensuring adequate liquidity to face potential disruptions in the operating environment. We have pivoted business decisions on cashflows and successfully driven cash neutrality in our operations by reducing spend, managing working capital and curtailing capital expenditure. We also raised additional funds of Rs.4,900 crores to build a contingency buffer. Our liquidity at the end of the year remained robust at Rs.17,745 crores including cash and cash equivalents of Rs.11,549 crores.
In Q4FY20, our India operations reported a 11%QoQ improvement in EBITDA to Rs.4,568 crores for the quarter, which is an EBIDTA margin of 23.4%. Tata Steel Standalone EBITDA margin was higher at 25.8%. Tata Steel BSL EBITDA improved to Rs.775 crores while Tata Steel LP increased to Rs.132 crores. Tata Steel Europe performance reported an EBITDA of Rs.65 crores compared to a loss of Rs.956 crores in 3QFY19. All this led to a 28%QoQ improvement in our consolidated EBITDA to Rs.4,669 crores.”
Statements in this press release describing the Company’s performance may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results may differ materially from those directly or indirectly expressed, inferred or implied. Important factors that could make a difference to the Company’s operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in or due to the environment, Government regulations, laws, statutes, judicial pronouncements and/or other incidental factors.
About Tata Steel
Tata Steel group is among the top global steel companies with an annual crude steel capacity of 34 million tonnes per annum. It is one of the world’s most geographically-diversified steel producers, with operations and commercial presence across the world. The group (excluding SEA operations) recorded a consolidated turnover of US $19.7 billion in the financial year ending March 31, 2020.
A Great Place to Work-Certified organisation, Tata Steel Ltd., together with its subsidiaries, associates and joint ventures, is spread across five continents with an employee base of over 65,000.
Tata Steel was recognised as DJSI steel sector leader in 2018 and has ranked fourth in the steel sector in 2019. Besides being a member of the worldsteel’s Climate Action Programme, Tata Steel has won several awards and recognitions including the World Economic Forum’s Global Lighthouse recognition for its Kalinganagar Plant – a first in India, and Prime Minister’s Trophy for the best performing integrated steel plant for 2016-17. The Company, ranked as India’s most valuable Metals & Mining brand by Brand Finance, received the ‘Honourable Mention’ at the National CSR Awards 2019, Steel Sustainability Champion 2019 by worldsteel, CII Greenco Star Performer Award 2019, ‘Most Ethical Company’ award 2020 from Ethisphere Institute, and Best Risk Management Framework & Systems Award (2020) by CNBC TV-18, among several others.
COMPANY: Tata Steel
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