Tata Steel’s growth will not come at the cost of debt but will instead be a balance between the company’s internal accruals and deleveraging, chief financial officer Koushik Chatterjee said, even as the steelmaker projected a six-month delay in achieving breakeven in its UK operations.
The UK business is now expected to break even in the first two quarters of the next financial year against an earlier expectation of the second half of the current fiscal year.
“Our capital allocation is very clear that we will not want to have the growth at the cost of debt,” he told analysts on Tuesday, adding that the company intends to bring down its net debt to Ebitda ratio to below 3.0 from 3.3 currently.
Excessive exports of steel from China at sharp discounts have hurt the price of the alloy across the globe. This, in turn, has impacted the profitability of Indian producers, most of whom are in the midst of expanding their production capacities.
A series of measures to cut costs and bring in operational efficiencies across geographies, though, will help combat the subdued market conditions, Chatterjee said. These include better inventory management, improved terms for credit and optimising blends.While Tata Steel managed to bring down its net debt by ₹3,000 crore sequentially to ₹85,800 crore at the end of the December quarter, its leverage ratio inched higher.
“With more and more volumes coming in out of India, the UK going towards a breakeven and a huge structural programme being taken out of the Netherlands, our intent is certainly to bring the debt level below 3.0,” Chatterjee said.
“The range at which we should be comfortable is somewhere around 2.75, including the growth,” he said.
While the complete benefits of the second phase of expansion at the company’s Kalinganagar operations will start coming in from September 2026, Tata Steel will have to spend around ₹3,000 crore more for capital expenditure at the plant.
“Unless China were to turn the tap off on exports, I don’t see international prices improving very significantly at least in the next one or two quarters,” CEO TV Narendran said. “But if China reduces exports to around 60 million tonnes, then steel prices can go up to the $550-600 (per tonne) level compared with the $480-500 levels now,” he said.
Source Name : Economic Times