The British business, which has been the Achilles’ heel of Tata Steel, is expected to perform ‘much better’ this year and may become profitable ‘this year or next’, Tata Group chairman Natarajan Chandrasekaran assured the shareholders on Wednesday.
Speaking at the 118th annual general meeting of the company, the chairman held out hope that the ongoing fiscal would be better for the Indian steel major on all counts on the back of an expanded capacity in India and a better performance of Tata Steel UK.
“Losses in the UK will be wiped out and going forward, this year or next year, it will become PAT-positive,” Chandrasekaran said, adding that groundbreaking for the new environment-friendly steel plant would take place this month.
Tata Steel, which acquired the UK business as part of the acquisition of Corus Group Plc in 2007, shut down the money guzzling blast furnace-based operation at Port Talbot, Wales in FY25. It is transitioning to steel production via electric arc furnaces, having a lesser carbon footprint with the assistance of the British government, which is providing a £500 million grant out of the £1.25 billion capex.
He also hinted that the Netherlands business would be getting a ‘lot of funding’ from the Dutch government for the transition towards less polluting steel.
Speaking about the general business environment, Chandrasekaran highlighted that China continued to export in large volumes (100 million tonnes annually), impacting the prices and profitability. He also observed that steel prices in India are ‘still soft’ despite the 12 per cent interim safeguard duty imposed by the Centre.
However, the chairman assured shareholders a better year for the Tata Steel group. “…based on our overall performance, increased capacity, and the current spread levels, we expect Tata Steel to post better revenues, better EBIDTA, better profits and better cash flow in FY26 than FY25,” Chandrasekaran said.
Commenting on the capex plans, the chairman said the company would spend on expanding capacity of Neelachal Ispat Nigam Ltd (NINL), apart from transition in the UK and Netherlands.
He also hinted that the company planned to spend big on buying mining assets, “Tata Steel will make investments in buying any mining assets because our iron ore mine capacity and what we have today will come up for renewal auction in FY30. With our increased footprint, we will need to increase our capacity so we will always look for opportunities.”
Grievances
Chandrasekaran said Tata Steel wanted to promote a culture where people are empowered to speak up about their grievances with the hope that they would be heard.
The chairman was commenting on shareholders’ observations on rising number of grievances from employees and customers, including instances of sexual harassment charges.
Noting that Tata Steel has a goal to resolve any issue that is raised within a maximum period of 90 days, he said that numbers are going up because the company has forayed into retail business.
“In the retail business, there are individual customer complaints or generally large compared with the B2B business. But nevertheless, it is upon us to make sure as one of the shareholders said we keep every customer happy,” he said.