Tata Steel gets committee of directors' nod to raise Rs 670 cr via NCDs

Tata Steel on Friday said its committee of directors has approved raising Rs 670 crore through issuance of debentures.

"The committee of directors has today approved allotment of 6,700...unsecured, redeemable, rated, listed non-convertible debentures (NCDs) having face value of Rs 10,00,000 each for cash aggregating to Rs 670 crore, to identified investors on private placement basis," the company said in a BSE filing.

The NCDs are proposed to be listed on the wholesale debt market segment of the BSE, it added.

Tata Steel stock was trading at Rs 295, up 2.86 per cent, on the BSE.

Searching for a turnaround push, Tata Steel Europe may cut 1250 jobs

Tata Steel Europe is planning to cut 1,250 jobs as it faces "challenging circumstances" and "needs to urgently improve profitability", Chief Executive Officer Henrik Adam said in an internal memo seen by Reuters on Tuesday.

"Our financial situation is serious and there's an urgent priority to improve the performance of the business and our cash position," Adams said in the memo.

Besides the job cuts, which would be less than half of what the company had announced last year, Tata Steel said it will not replace employees who have retired or left the company.

It had in November decided to cut 3,000 jobs across its European business.

The company has outlined details of a transformation programme and continues to be in talks with its European works council to minimise job losses, according to the memo.

"Although it's good news that we are able to minimise the impact on our current employees, we need to progress with speed to secure the future for the business," Adam said.

In response to the Tata Steel's plans, Britain's Unite union has called https://unitetheunion.org/news-events/news/2020/march/urgent-talks-call-as-tata-steel-job-losses-across-europe-on-cards for "urgent talks" with the company to discuss the implication on the company's UK operations, including the Port Talbot site in South Wales.

 

Tata Steel committee of directors approves raising Rs 670 cr via NCDs

Tata Steel on Monday said the committee of directors has approved raising Rs 670 crore through issuance of debt securities.

The decision was taken at a meeting of the Committee of Directors, which is constituted by the board, on March 9, the company said in a BSE filing.

A total of 6,700 non convertible debentures (NCDs) of face value Rs 10,00,000 each would be issued aggregating to Rs 670 crore, the filing added.

The date of the allotment of the debt securities is March 13, 2020 and date of maturity is March 13, 2025, it said.

Tata Steel steps up focus on digital, physical channels to drive volumes

Tata Steel has sharpened focus on digital and physical channel expansion to deepen market penetration and drive volumes.

The steel manufacturer's on ground delivery and distribution network rose 11 per cent year-on-year (y-o-y) in Q3 or December quarter of this fiscal. It has also witnessed a substantive scale up in its digital channel. Multi-brand e-commence platform Tata Aashiyana has touched an annualized revenue rate of Rs 380 crore during Q3. Likewise. Tata Basera, an initiative to leverage distribution networks across Tata Group Companies realised a year-to-date sales of Rs 114 crore.

The steel behemoth's retail business experienced 16 per cent y-o-y growth during Q3. Tata Tiscon achieved 12 per cent volume growth led by Aashiyana channel ramp up and group synergy initiatives. For Tata Shaktee, volume appreciated 13 per cent y-o-y with the launch of long length GC (galvanized iron corrugated) sheets, WAMA (wall profile) and improvement in TSBSL’s (Tata Steel BSL Ltd) galvanized line capability. Tata Kosh, a brand focused on rural consumable markets saw its retail footprint soaring three times in the quarter under review.

Tata Steel's emerging customer business logged 37 per cent y-o-y growth. New channel capacity drove 40 per cent of sales growth achieved in Q3. Similarly, sale of coated products surged 60 per cent y-o-y. Sales of coated products moved up 41 per cent in the period, the company said in an analysts' presentation for the quarter ended December 31, 2020.

The steel firm achieved 17 per cent quarter-on-quarter (q-o-q) in total deliveries with 15 per cent hike in domestic deliveries despite three per cent dip in India's apparent steel consumption. In automobiles segment, Tata Steel maintained flat growth amid 13 per cent drop in industry output. Deliveries in branded products & retail and industrial products & projects segments rose 22 per cent and 12 per cent q-o-q respectively.

Tata Steel major supplier of steel to Namaste Trump venue, Motera stadium

Tata Steel on Monday said that three-fourth of the steel rebars supplied for the Sardar Vallabhbhai Patel Stadium in Motera came from the steel producer.

The world’s largest cricket stadium, the venue for ‘Namaste Trump’ event to welcome US President Donald Trump, is made up of Tata Tiscon rebars which constitute 11,000 tonne steel rebars that make 75 per cent of the total rebar (15,000 tonne) requirement for the project, said the company in its release.

One of the unique features of this project is that out of 11,000 tonne of rebars provided, 8,400 tonne of steel was supplied in the cut and bend form (Tiscon Readybuild) besides supply of 41,000 pieces of couplers and 84,000 threads.

Tiscon Readybuild is a construction solution wherein an off-site rebar processing is done at specialized Readybuild service center enabling supplies of rebars in customised shapes and sizes, thus reducing steel wastage at site and expediting delivery of projects, explained Tata Steel in its release.

“For this particular project, we have provided customised products that eliminate the wastage of steel, thus contributing towards our goal of sustainability,” the release quoted Peeyush Gupta, vice president, steel (marketing & sales) as saying.

Motera cricket stadium, located in Ahmedabad district of Gujarat, has the seating capacity of 110,000.

Tata Steel's Dutch subsidiary raises euro 1.75 bn to refinance debt

Tata Steel on Friday said its Netherlands subsidiary has executed agreements for the refinancing of its bank debt and has raised term-loan facilities of EUR 1.75 billion from 19 banks.

Tata Steel Netherlands Holdings B V (TSNHBV), a 100 per cent subsidiary of Tata Steel Ltd, has raised the long-term fund.

"This represents a reduction of EUR 500 million versus the external debt outstanding in Tata Steel Europe as of March 2019, enabling the standalone European business to have a more robust balance sheet, while it is also putting in significant efforts at restructuring and improving its operating performance," the company said in a statement.

The facilities have also been contracted at favourable terms and more efficient pricing, besides extending the maturity profile relative to the existing ones, it added.

"The new financing has more flexible terms and better pricing that will provide greater financial headroom to the business in the coming years," said Koushik Chatterjee, executive director and chief financial officer, Tata Steel.

The Company was able to complete this financing despite all the volatility in the financial markets, demonstrating the strong confidence enjoyed by Tata Steel in the financial community, the official added.

Tata Steel Group is among the top global steel companies with an annual crude steel capacity of 33 million tonnes per annum.

It is one of the world's most geographically-diversified steel producers, with operations and commercial presence across the world.

Tata Steel India Q3 production volume marginally up to 4.46 MT in FY20

Tata Steel on Friday said that its production volume in India registered a marginal 1.8 per cent increase to 4.46 million tonnes (provisional) in the third quarter of the ongoing financial year. Its production volume was at 4.38 MT (actual) in the year-ago period, the steel major said in a filing to BSE.

Tata Steel India's sales volume in the third quarter of the ongoing fiscal increased by 17 per cent quarter-on-quarter (QoQ) with improved market sentiment. Sales volume to auto segment was maintained during the quarter, it said.

The branded product and retail segment grew 23 per cent QoQ, while industrial products and projects grew 12 per cent QoQ.

"Tata Steel Europe's 3QFY20 production and sales volume was flattish on QoQ basis. Tata Steel South East Asia operations registered lower production volume QoQ due to continued sluggishness in Singapore and Thailand markets," it said.

The Indian economy, it said, remained weak with declining private consumption growth and low investment growth.

Domestic steel prices reached a nadir in October 2019 before improving from November onwards.

Steel prices are expected to improve with strong retail demand and ongoing restocking demand at the dealers' ends, it said. Tata Steel Group is among the top global steel companies with an annual crude steel capacity of 33 million tonnes per annum.

Dovetail 'cost of business' with 'ease of doing business': Tata Steel CEO

Tata Steel CEO and Managing Director T V Narendran has underscored the need for the government to focus on the "cost of business" as part of the Centre's efforts at improving the "ease of doing business", amid a slump in the price of steel.

He said that will give a fresh impetus to the manufacturing sector and make it more competitive.

"As the government has focused on ease of doing business, it should also focus on 'cost of business' to make industries, particularly the manufacturing sector, more competitive in the prevailing market.

"We have been controlling the cost of business inside the work but outside the plant, it is not in our hands but the central and state governments," he said on Wednesday.

He said such an initiative would certainly improve competitiveness of domestic industries, particularly the manufacturing units.

Referring to the steel sector, Narendran said that 2019 was a difficult year and Tata Steel was no exception.

Narendran, however, was optimistic that the demand for steel will go up.

"We have seen some signs of improvement in the last few months of 2019 which reflected in improved demand for steel...it shot up a bit and (we see) steel prices going up again."

He said steel prices had plunged by almost Rs 10,000 per tonne in the last six to eight months.

Narendran said despite the steel industry being under pressure, Tata Steel has not whittled down its expenditure on developing the steel city of Tatanagar.

Urging the inhabitants of the city to make "sacrifices" so the company is "sustainable, profitable and competitive", he expressed confidence that Tata Steel will improve its performance in the last quarter of the current fiscal as the "demand of steel is okay" now.

The January to June months would be favourable for the steel sector in view of activity in construction and infrastructure sectors, he said.

The period between April to October 2019 was the worst for the steel sector, but things started looking up from November.

"We are expecting to perform well in the last quarter of the current fiscal," he said, adding the government has also taken decisions like a cut in corporate taxes and announced large-scale investment in public infrastructure, measures that would likely boost the steel sector.

Focus on 'cost of biz' to make industries more competitive: Tata Steel MD

The chief executive officer and managing director of Tata Steel, T V Narendran has suggested to the government to focus on "cost of business" to make industries, particularly the manufacturing sector, more competitive.

"As the government has focused on ease of doing business, it should also focus on 'cost of business' to make industries, particularly the manufacturing sector, more competitive in the prevailing market," Narendran told reporters on Wednesday.

"We have been controlling the cost of business inside the work but outside the plant, it is not in our hands but the Central and state governments," the Tata Steel CEO said.

He said that such an initiative would certainly improve competitiveness of the domestic industries, particularly the manufacturing units.

Referring to the prevailing scenario in the steel sector, Narendran said that 2019 had been a difficult year for the steel sector and "the Tata Steel is not an exception as we have our own set of challenges to deal with".

However, Narendran said, "We have seen some signs of improvement in the last few months of 2019, which reflected with improved demand of steel shot up a bit and steel prices going up again."

He said that the steel prices almost shot down to Rs 10,000 per tonne during the last six to eight months. As far as development of the steel city of Tatanagar is concerned, he said that the Tata Steel has not slowed down investment despite difficult times of the company, demonstrating the companys commitment.

Narendran urged the city to make sacrifices to make the company sustainable, profitable and competitive. He expressed confidence that the company will improve its performance in the last quarter (January-March) of the current fiscal as 'demand of steel is okay'.

The January to June months would be favourable for the steel sector in view of the activities in construction and infrastructure sectors, he said. Commenting on the prevailing economic slowdown, he said. April to October had been the worst period for the steel sector, which has started looking up from November.

"We are expecting to perform well in the last quarter of the current fiscal," he said, adding the government has also taken various decision such as cut in corporate taxes and the recent announcement of investment in infrastructure sector.

Tata Steel asks LGBTQ+ employees to declare partners, avail HR

Tata Steel on Monday said it has introduced a new human resource policy that enables its employees from the LGBTQ+ community to declare their partners and avail all HR benefits permissible under the law.

With its vision to provide equal opportunity to the employees, it has been an endeavour of the company to create an enabling workforce for all diverse groups, respecting and embracing the differences in the individuals, the steel maker said in a statement.

"Partners mean people of same-sex living like a married couple," it said.

LGBTQ+ refers to lesbian, gay, bisexual, transgender, questioning and related communities.

Under the expanded diversity and inclusion (D&I) policy, Tata Steel employees and their partners will be able to avail a host of benefits including health check-up, medical facilities, adoption leave, new-born parent and child care leave, and inclusion in employee assistance programme (EAP).

Employees will also get financial assistance for gender reassignment surgery and 30 days special leave for the same, the steel maker said.

They will also be eligible for Tata Executive Holiday Plan (TEHP), honeymoon package and domestic travel coverage for new employees, it said.

"The company's vision is to be a world-class equal opportunity employer where everyone is respected and every voice is heard. It is a constant endeavour of the company to create an enabling workplace for all diverse groups, respecting and embracing the differences in the individuals," the statement said.

Besides, this policy entitles them to be equally eligible for participating in any event including an official gathering or an offshore corporate event, where earlier "only spouses of opposite gender were included", the company added.                                                                                                                                                                                                                                                                              

Tata Steel confirms 1,000 job cuts in UK as talks with workers kick off

Tata Steel Europe has begun consultations with the European Works Council (EWC) on restructuring plans for its business, which would include up to 3,000 job losses - 1,000 of which will be in the UK.

The job cuts were announced by the Indian steel major last week as part of a wider transformation programme as it blamed ongoing losses and continued global headwinds faced by the steel industry.

As part of the comprehensive set of proposals, Tata Steel Europe intends to lower employment costs, the company said in a statement on Wednesday.

This is expected to lead to an estimated reduction in employee numbers of up to 3,000, about two-thirds of which would be management and office-based roles. Up to 1,600 are expected in the Netherlands, 1,000 in the UK and 350 elsewhere in the world, it said.

Tata Steel said it aims to build a financially strong and sustainable European business, able to make the investments required to accelerate innovation and the company's journey towards carbon-neutral steelmaking.

Tata Steel in Europe CEO, Henrik Adam, said: I'm very proud to see the dedication of everyone in this business, determined to succeed even in the face of a very tough market. I also understand and appreciate colleagues' concerns about these proposals.

Change creates uncertainty, but we cannot afford to stand still as a company - the world around us is changing fast and we have to adapt. Our strategy is to build a strong and stable European business, capable of making significant investments needed for a successful future.

During the meeting this week, which marked the official start of the employee consultation process with the EWC workers' unions, Tata Steel Europe said it had shared initial proposals about its transformation programme, focused across three other key areas besides lowering employment costs to improve the company's financial performance.

Increasing sales of higher-value steels by improving product mix and customer focus; efficiency gains by optimising production processes, supported by the application of big data and advanced analytics; and reduction of procurement costs through smarter sourcing and strengthening cooperation with companies within the Tata Steel group are among the other key focus areas of the company's plans.

Tata Steel said it agreed with the EWC on a forward process and will meet again in the coming weeks to discuss further details, with employees and other stakeholders kept updated during the process.

Analysts see Tata Steel stock rising in 2020 as firm revamps Europe biz

A revamp of its European operations, an improved product mix and a ban on cheaper steel imports to India may bolster the fortunes of Tata Steel Ltd.’s shares, the least valued stock on the South Asian nation’s benchmark equities gauge.

Tata Steel shares have lost nearly half of their value since Jan. 2018 to trade at a price-to-earnings ratio of 4.7, the lowest on the S&P BSE Sensex Index. The company, which last year got more than 50 per cent of its sales abroad, last week outlined job cuts and other measures aimed at cutting costs in Europe, which it called a “dumping ground” for steel.

“Indian steel prices may have found a floor, thanks to the minimum import price, and have already started moving up,” said Siddharth Gadekar, an analyst at Equirus Securities Pvt., “That kind of stability in prices gives investors confidence.”

Tata Steel has been closing and selling plants in the UK since the 2008 financial crisis to make its business there more profitable.

It’s now focusing on India, and aims to ramp up capacity as demand is set to expand by as much as 7 per cent in 2020, according to the World Steel Association. That’s the most among the top 10 steel using countries.

While protection from cheaper shipments from abroad will also benefit Tata Steel’s domestic peers, its valuation advantage, product mix and debt reduction steps may increase its appeal to investors. India imposed a minimum import price for steel products in 2016.

“Tata’s volume of sales should beat the rest of the industry because of their value for money offering, and their entrance into the pipeline steel category,” said Richard Leung, an analyst with Bloomberg Intelligence, “The rest of the industry may see muted growth next year because of reliance on legacy demand like automobiles.”

To be sure, Tata Steel’s debt-to-equity ratio is higher than most local peers, largely due to its 2007 purchase of Corus Group Plc for about $13 billion and its acquisition of Bhushan Steel for about $5.3 billion last year. Still, Moody’s Investors Service said in a Nov. 25 note that the company’s European cost cuts will support a turnaround in less profitable operations that have hurt the company’s overall credit quality.

“In a down cycle the companies that have higher debt tend to trade at a discount,” said Equirus Securities’ Gadekar, “With their earnings profile and current steel prices, they can service their debt easily.”

Tata Steel's cost rationalisation plan for Europe credit positive: Moody's

Tata Steel Limited recently outlined a programme to reduce costs and improve product mix at its European operations, which are held by the company's wholly-owned subsidiary, Tata Steel UK Holdings Limited (TSUKH).

The planned cost rationalisation is credit positive for both companies as it will support a turnaround in TSUKH's less profitable operations that have impacted Tata Steel's consolidated credit quality, said Moody's Investors Services in a report.

The European operations accounted for 35 per cent of Tata Steel's total shipments in the first half of FY20, but generated only around 2.4 per cent of its reported consolidated EBITDA.

The programme chalked out by the company features two key initiatives for its European operations--reducing costs and improving realisations.

Synergies from centralised sourcing of key raw materials and capital equipment for the European and Indian businesses, and a reduction in workforce of up to 3,000 (or 15 per cent of its total strength in Europe) will reduce costs.

At the same time, an better product mix with increasing contribution of high-value steel products will support better realisations. The company also plans to deploy technology – including the application of big data and advanced analytics – to streamline and automate processes, reduce lead time for orders, improve production planning, and streamline its marketing and sales network. If these concerted efforts deliver significant cost savings, they will help improve profitability.

In particular, the company aims to improve the profitability of its European operations, measured by the EBITDA margin, to 10 per cent through the cycle on a reported basis, from one per cent in the first half of fiscal 2020.

Additionally, the transformation plans to help the European operations generate positive free cash flows in fiscal 2021.

Although the programme is credit positive and a continuation of the company's efforts to turn around the European operations, a timely and meaningful improvement in performance is key, the Moody’s report said.

Sustained weakness in demand from Europe's steel-consuming sectors, global economic slowdown and increasing trade barriers cast downside risks to the pace of credit profile improvement.

Tata Steel's Indian operations are the cornerstone of its strong profitability, as these operations are integrated into the production of key raw materials in steel making, which combats the country's slowing steel demand and declining end-product prices.

Sluggish economic growth and weak offtake from the automobile, manufacturing, property and construction industries have diminished steel demand in India and caused a decline in end-product prices in the first half. Even so, Tata Steel reported a 26 per cent EBITDA margin in the first half of fiscal 2020 in its standalone Indian operations.

"Given the large gap in the profitability of its European operations and that of its India business, we do not anticipate any significant change in their respective contribution to the company's consolidated EBITDA over the next two years, at least," said the report.

"However, a turn around in the performance of the substantially less profitable European business will improve TSUKH's credit profile and reduce the divergence in the two business' credit strengths," it added.

Tata Steel to cut jobs across European ops due to excess supply, high costs

Tata Steel plans to cut jobs across its European operations as it wrestles with excess supply and high costs, the company said on Monday. Following a weekend interview in the Financial Times with the group's European chief executive, Henrik Adam, Tata confirmed it was planning to announce job cuts across the European business, which employs around 20,000 people.

No numbers have been made public. Indian-owned Tata Steel, which launched a transformation programme in June to strengthen its European business, has operations including steelmaking in the Netherlands and Wales and downstream operations across Europe.

There will be no plant closures but the aim is to shield the company against the "huge number of challenges" it faces, the company said.

"We are working hard on our plans to be operationally cash positive," Adam said, adding that the company was aiming for "a fundamental change". A company spokesman confirmed Adam's comments originally made to the Financial Times.

Steel making in Europe has come under strain from international competition and high energy costs, putting large numbers of well-paid jobs under threat.

European steelmakers blame China for the extent of a surplus in the market, but the world's biggest steelmaker says it has made its own deep cuts to capacity. Britain last week announced that Chinese steelmaker Jingye has signed a provisional deal to buy British Steel, which went into compulsory liquidation in May.

The agreement is politically resonant ahead of British elections as job opportunities have become a major issue. If confirmed, the rescue could save thousands of jobs.

ArcelorMittal, the world's biggest steelmaker, has idled a series of plants across Europe.

In an emailed statement on Monday, Tata Steel said challenging market conditions had been made "worse by the use of Europe as a dumping ground for the world's excess capacity".

The company's European transformation programme launched in June aimed to develop "a simpler and leaner organisation, capable of sustainably financing high levels of investment, Tata said. Changes will include streamlining supply chains and using technology to improve efficiency, as well as seeking to cut employment costs.

Tata's quest to boost profitability follows a European anti-trust decision to block a joint venture with Germany's Thyssenkrupp.

Tata Steel reports pre-tax loss of Rs 6.5 crore, net sales down 15.4%

Tata Steel reported a loss of Rs 6.54 crore before tax on a consolidated basis in the September quarter (Q2) against a profit of Rs 5,411 crore in the corresponding period last year, mainly due to a fall in realisations across geographies.

The loss is after exceptional expenses that include gain on non-current investments, restructuring and other provisions, totalling Rs 33.56 crore for Q2 versus a gain of Rs 163.77 crore in year ago quarter. Even if these are excluded, the company's managed a pre-tax profit of only Rs 27.02 crore in Q2. Net sales stood at Rs 33,954 crore in the period under review, down 15.4 per cent from last year as realisations declined significantly amid weak demand in the domestic market.

“The business environment in India and other geographies continued to be challenging and weighed heavily on steel prices. Sequentially, realisations fell by Rs 4,000 per tonne which impacted the top line,” said T V Narendran, chief executive officer and managing director, at the earnings conference.

Without the favourable tax, the firm’s operating performance was dismal as its comparable/adjusted Ebitda stood at Rs 4,018 crore, versus Rs 8,641 crore in the same period last year.

During the quarter under review, the company had a favourable tax impact of Rs 4,233 crore, of which Rs 2,425 crore was due to adoption of the new corporate tax rate by Tata Steel (standalone) and some of its subsidiaries in India. Also, Rs 1,808 crore was on account of recognition/ reversal of deferred tax assets (DTA) and liabilities in offshore subsidiaries.

These lent support to the bottom line as the company reported a consolidated net profit of Rs 3,302 crore in the September quarter, up 6 per cent from the corresponding period last year.

According to Bloomberg estimates, the company’s net sales was seen at Rs 34,476 crore in the September quarter, while its bottom line was expected to be at Rs 338 crore.

chartConsolidated adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) margin stood at 11.6 per cent in the quarter gone by with Ebitda per tonne at Rs 6,155. For the India business, despite the challenging environment, Ebitda margin was comparatively healthy at 22.4 per cent with Ebitda per tonne at Rs 11,200. Considering the weak demand scenario, the management said it has reduced capex guidance for FY20 to Rs 8,300 crore from Rs 11,000 crore earlier and that the capex could see a sharper recaliberation, going ahead, depending on the market condition. As on September 30, the company’s net debt stood at Rs 1,06,952 crore and gross debt was at Rs 1,11,549 crore.

“While our gross debt increased during the quarter due to an increase in working capital, we have renewed our focus on cash flow maximisation through operational improvements, working capital reduction and rationalisation of capex which will help us deleverage,” said Koushik Chatterjee, executive director and chief financial officer.

During the quarter, the company tied up $525 million of foreign currency loans which will help lengthen the debt maturity profile. The company said its liquidity position continues to be strong with cash balance of Rs 4,596 crore and unutilised bank lines of Rs 7,262 crore.

Tata Steel had plans to lower debt by $1 billion for FY20 and has repaid euro 370 million so far. While the management informed that it will not be able to meet the $1 billion repayment target this year, repayment of a similar tranche (of close to euro 370 million) could take place by January-February 2020.

In the September quarter, Tata Steel Europe’s liquid steel production was impacted by weak market conditions, planned summer shutdowns and unplanned outages.

Tata Steel Europe has launched a transformation programme to make operations simpler, leaner and sustainable for long-term success, it said.

Tata Steel to continue to take tough decisions for Europe operations

Tata Steel will continue to take tougher decisions for its Europe operations to keep its overall business growing, brokerages and rating agencies said.

Dutch media outlet NH Nieuws recently reported that Tata Steel Europe, a subsidiary of Tata Steel India, has decided to cut 2,500 jobs, or 25 per cent of its workforce in Europe to save $930 million in costs. The final plan on job cuts will be ready by November, it said.

“Performance of Europe operations is going nowhere and it continues to need a lot of support from India operations. In such a scenario, it makes sense to cut down fixed costs (such as headcount) to curtail cash loss and rein in the business condition,” said a senior analyst with a ratings agency on condition of anonymity.

Though Europe operations did show some improvement in performance a few quarters ago. Overall, its contribution to the consolidated figures have been a dismal with India operations holding the fort for the steel company. (see chart)

“As a management, we are not keen on missing out opportunities in India because we have to keep sending cash to Europe. We have told the (Europe) team that the best way for them to control their future is to be cash-positive,” T V Narendran, chief executive officer (CEO) and managing director (MD) had said earlier.

In June 2018, Tata Steel decided to merge its European operations with ThyssenKrupp — giving it ultimately 45 per cent stake in the merged entity. But the merger idea did not go well with the labour unions of ThyssenKrupp, who feared job losses. Besides, investor groups, which held 18 per cent stake in the German company, also did not approve the plan and its share price lost half value in the last one year.

In May this year, Tata Steel's plans to merge its European operations with ThyssenKrupp collapsed following objections from the anti-trust authorities of the European Commission.

“There is no other major player in the region for any JV with Tata Steel. Also, they (Tata Steel) do not have any plan-B to make operations profitable.

In such a situation, the company has no choice but to keep downsizing operations gradually,” said a Mumbai-based brokerage analyst on condition of anonymity.

Meanwhile, Tata Steel responded through statement saying, “Like all European steelmakers, Tata Steel Europe continues to experience challenging market conditions, made worse by the use of Europe as a dumping ground for the world’s excess capacity.”

“We launched a transformation programme in Tata Steel Europe in June to strengthen our business. We are aiming to develop a simpler and leaner organisation, capable of sustainably financing high levels of investment, which are essential to our long-term success,” Tata Steel spokesperson was quoted as saying. According to the company, the programme is gathering pace to urgently improve performance. Proposals are being developed to improve supply chain, manufacturing performance and raw materials usage, as well as efficiency gains through digitalisation. "We expect these to include a reduction in our employment costs which would be subject to the full consultation process with employee representatives."

In April 2007, Tata Steel announced that the company has completed its $12 billion acquisition of Corus Group plc (Corus). After this acquisition, Tata Steel will have crude steel production of 27 million tonne (MT) and will be the world’s fifth largest steel producer with 84,000 employees across four continents.

Tata Steel entered the Europe market (in 2007) when consumption was on a declining trend in the region. Around the same period, players such as JFE Holdings Inc, the world's fifth-biggest steelmaker and Nippon Steel made an entry in the India market, where consumption has been continuously rising.

According to the World Steel Association data, consumption of crude steel in the European Union region has declined to 178 million tonne in 2017 from 207 million tonne in 2008. During the period, consumption pattern has been erratic and not displaying any clear growing demand trend. Meanwhile, in the period under review, crude steel consumption in India was continuously on a rise, and in fact nearly doubled to reach 101 million tonne 2017 from 56 million tonne in 2008. (see graph)

According to the latest Care Ratings report, the domestic operations of Tata Steel continue to remain strong with PBILDT (profit before interest, lease, depreciation and tax) of Rs 23,833 crore during FY19 leading to PBILDT per tonne of Rs 14,679.

However, the financial performance of the European operations continued to remain subdued with EBITDA of Rs 5,414 crore, thereby leading to PBILDT per tonne of Rs 5,634

The profitability from European operations is constrained by factors such as a lack of captive raw material sources, intense competition, high employee costs and overheads. Thus, the strong performance demonstrated by the company in the domestic markets at operating profit level is partly offset by the subdued performance in the European market thereby keeping the consolidated PBILDT at Rs 30,734 crore with consolidated PBILDT per tonne of Rs 11,468 as compared to domestic EBIDTA per tonne of Rs 14,679, said CARE.

Tata Steel subsidiary bags first lapsing merchant mine at Odisha's auctions

TS Alloys Ltd, the wholly owned subsidiary of Tata Steel, has been declared the preferred bidder for the chromite lease now held by Misrilall Mines. The mine is among the scores of merchant mines whose lease validity ends by March 31, 2020.

A source tracking the online auctions said, TS Alloys outbid many strong contenders, quoting a premium of 88.5 per cent over and above the reserve price.

As many as 12 bidders were in the fray for acquiring the chromite deposit with one of them facing disqualification. Besides TS Alloys, Tata Steel, Jindal Stainless Ltd (JSL) and Indian Metals & Ferro Alloys Ltd were among the key contenders. The chromite lease held by Misrilall Mines is the first lapsing mine to have been successfully auctioned in Odisha.

Simultaneously, the bidding for another lapsable merchant chromite mine- B C Mohanty was ongoing at the time this report was filed.

Incorporated in January 1969, Misrilall Mines in Jajpur district is amongst the oldest operative chromite mines in Odisha.

Tata Steel Europe says Henrik Adam to replace Hans Fischer as CEO

Hans Fischer, the CEO of Tata Steel Europe (TSE), will retire from effective July 1, 2019, said Tata Steel on Thursday.

Henrik Adam, chief commercial officer of Tata Steel Europe, will succeed Fischer as CEO. He will join the board of Tata Steel Europe and report to T V Narendran, managing director and CEO of Tata Steel.

Adam joined Tata Steel Europe in 2011 as chief commercial officer, helping it to transform into a customer-centric organisation, the company said. Before joining Tata Steel, he held a wide range of roles at Thyssenkrupp, including CEO of ThyssenKrupp Electrical Steel.

Tata Steel told stock exchanges Fischer will continue to be on the board of TSE as a non-executive director and he will advise Narendran till September 30, 2019 to ensure a smooth transition of leadership.

Narendran said in a statement Adam will continue the transformation of the business so it becomes stronger and self-sustaining. "Faced with challenging external conditions, our European business will continue to focus on higher-value, higher-specified steel products which make our customers more competitive and successful.”

The leadership changes come after Tata Steel's plans of a joint venture with Thyssenkrupp collapsed.

In 2018-19, revenues from Tata Steel Europe stood at Rs 64,777 crore while the EBITDA was at Rs 5,414 crore, an increase of 46 per cent over the previous year. But the European operations reported a loss before tax.

In a further change, the board of Tata Steel Europe also announced that N K Misra, executive director finance Tata Steel Europe, will retire from his position on December 31, 2019, though he will continue as an adviser to the company’s executive committee.

The board has appointed Sandip Biswas, group executive vice president finance Tata Steel, to the board of Tata Steel Europe. He has also been appointed executive director Tata Steel Europe with effect from July 1, 2019. He will take over as the CFO of Tata Steel Europe from January 1, 2020.

Tata Steel leans on non-steel segment to beat cyclical trends in main biz

Tata Steel is looking to partially insulate revenues from the cyclicality of the steel business by exploring possibilities in the non-steel materials segment, which it hopes will constitute 10 per cent of the company's revenues by 2025.

The new materials business is focused on fibre-reinforced polymer (FRP) composites and graphene for the time being, but there is also an effort in bringing advanced materials like ceramics into the fold.

The company's latest annual report said that with the growth in the economy, there was a large opportunity for new materials and applications for existing and new sectors, and Tata Steel aspired to be a technology and innovation leader in the industry, creating new businesses in high-potential alternate materials.

Going forward, the new businesses are expected to account for 10 per cent of revenues.

The model adopted by the new materials business is asset-light model through partnerships and collaborations to develop FRP products that cater to automotive, industrial, infrastructure and railway sectors. The wide-ranging applications could be solutions for streetlight poles, pressure vessels, pipes, modular toilets, chemical tanks and footover bridges.

Tata Steel is already collaborating with National Composite Centre - Bristol: UK, Indian Institute of Science, Bangalore, IIT Roorkee, NIT Rourkela and other Council for Scientific and Industrial Research (CSIR) Labs for the purpose.

There is some progress however in commercialisation of graphene. Industrial solutions developed with graphene-doped composites have offered significant improvement in the operational costs of the process plants. Also, graphene anti-corrosion coatings have been established towards a green alternative from the current coating technologies.

Tata Steel's idea behind moving beyond steel and scaling it up over time is to insulate revenues from steel cyclicality.

The services and solutions business is another vertical to aid the company in this endeavour.

Pravesh (steel doors and windows) and Nest-In (modular construction solution) are offerings from Tata Steel's services and solutions stable.

Since inception, around one lakh units of Pravesh have been installed and over 10,000 customers have been served until this financial year. During the year, the turnover from Tata Pravesh doors and windows have increased by 80 per cent compared to the previous year. Nest-In too has doubled its business during 2018-19 over previous year.

For the services and solutions vertical, the target is steeper, 20 per cent of revenues by 2025.

To break the commodity cycle Tata Steel started branding steel decades back. Now, the company is taking it to the next level - with services & solutions and non-steel materials - to beat the ups and downs of the ups and downs of the industry.

Beating cyclicality

Tata Steel to insulate revenues from steel cyclicality

Targets 10 per cent revenues from non-steel materials by 2025

Targets 20 per cent revenues from services and solutions vertical by 2025

Tata Steel to seek shareholders' nod to re-appoint Narendran as CEO and MD

Tata Steel Sunday said it will seek shareholders' nod for the re-appointment of T V Narendran as CEO and MD of the company.

It will also seek shareholders' approval for appointment of Vijay Kumar Sharma as a director and reappointment of Mallika Srinivasan and O P Bhatt as independent directors, as per a BSE filing.

The company's next Annual General Meeting is scheduled for July 19, 2019 in Mumbai.

Tata Steel is seeking the consent of shareholders for reappointment of Narendran as CEO and MD for a period of five years with effect from September 19, 2018, not liable to retire by rotation, it said.

The company also said it will seek approval to appoint a director in the place of Koushik Chatterjee.

Narendran, 54, was appointed as the Managing Director for a period of five years with effect from September 19, 2013, and the appointment was approved by the shareholders at the AGM on August 14, 2014.