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Informist, Friday, Jul. 31, 2026

 

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--Tata Steel: Q1 ops hit partly by W Asia-war led supply chain disruptions
--CONTEXT: Comments by Tata Steel's mgmt in post-earnings investor call
--Tata Steel: Progressed in aim to go more in downstream pdts, svcs solution
--Tata Steel: W Asia war continued to hit energy, freight costs in Q1
--Tata Steel: Preparing for insurance recovery of Talbot plant fire damage
--Tata Steel: Neelachal capacity to be 6.2 mln tn/yr post phase 1 of new add
--Tata Steel: European mkt seeing disruptions on regulatory front currently
--Tata Steel:Doing internal heavy lifting to move UK ops to EBITDA breakeven
--Tata Steel: 90% of company's current iron ore output coming from old mines
--Tata Steel: Seeking level playing field in norms from European authorities
--Tata Steel: New 4.8 mln tn/yr capacity add in Neelachal to take 48 mos
--Tata Steel: Some benefit from revised auto clients contracts to flow in Q2
--Tata Steel:Netherlands investments regulatory in nature, not discretionary
--Tata Steel: Aiming to balance India upstream investments with downstream
--Tata Steel: Lot of downstream units to get commissioned in next 30 months
--Tata Steel:Accelerating depreciation on mining assets amid regulatory need

 

By Rajesh Gajra and Astha Oriel

 

MUMBAI/NEW DELHI - The carbon tax-related policy norms for steel producers in Europe has not changed for the worse, and is happening as it was said to, but the regulatory environment, particularly in the Netherlands as far as Tata Steel Ltd.'s operations there are concerned, "has become more and more challenging," the management of the company said at a post-earnings conference call with investors and analysts Friday. The concern for the company in the Netherlands "is that some of the expectations (from it) are beyond what any other steel company in Europe," a senior official said.

 

Other steel companies in Europe are not expected to meet the levels that Tata Steel is expected to meet in the Netherlands, and that is a conversation "we are having with the government and the regulatory authorities," a senior official said. "Ultimately we have to compete with the other steel companies in Europe," he said, adding that the company is seeking a level playing field with the European authorities "as far as emissions are concerned."  

 

Technical solutions are needed, otherwise the situation will have an impact on the company's operating capability, costs, and other metrics in the Netherlands, and in Europe in general, he said.

 

According to the management, Tata Steel's European operations are in that zone where it has to choose between continuing to invest in capex to meet regulatory compliances or to find alternative paths that are not capital expenditure heavy. "But if these regulatory frameworks become permanent and there is no rethink then obviously there will be a rethink at least on our side," a senior official said. The investments made by the company in its Netherlands operations have been regulatory in nature and not discretionary, the management said.

 

For the June quarter performance for its European operations, the management said 20% of the company's production in the Netherlands has been hit due to the shutdown of the direct sheet plant since the first week of April. "We have just got the approval to run it for four weeks starting 5th of August and hopefully the data that we generate through that production will help us get the permission to run it beyond that," T.V. Narendran, Tata Steel chief executive officer, said.

 

On the issue of the recent letter from the environment regulatory agency and local authorities in the Netherlands expressing their intent to revoke permits of Tata Steel Netherlands' coke and gas plants due to alleged breach of environmental rules in the coke ovens, the management said the public prosecutor intends to go forward in the case. "We have our defence and I think we have our data and position on the defence," a senior official said. 

 

To a question on whether this prosecution case also involved company executives, the management said, "We have heard about the fact that there can be people named" but that has not happened "as yet". The management said it will "just see as to how this unfolds" but the company had all the defence available "to fight this case out."

 

In the case of the company's UK operations, a senior official said the company was "preparing for the insurance recovery process to recover some of the damages due to the fire" at the Port Talbot plant's pickle line in early June.

 

On the India operations, the 4.8 million tonnes per annum capacity expansion at Neelachal Ispat Nigam Ltd. at an estimated capex of INR 338.73 billion, that the company announced Thursday, will take 48 months to commission, as per the management. This will take the Neelachal plant capacity up sharply at 6.2 million tonnes per year at the end of the first phase of the expansion, as a part of the overall strategy to have an annual capacity of 10 million tonnes per year, the management said. 

 

The company is also expanding its iron ore mining capacity at the Odisha mines. "Today we are maybe about 45 million tonnes going to 50 million tonnes of iron ore production. And I would say 90% of that production is actually coming from our old mines," a senior company official said. The company's new iron ore mines are producing less than 5 million tonnes, as per the management. 

 

"Over the next few years we expect to take this to about 30-35 million tonnes. So that is the work which is going on currently. Obviously, the cost of iron ore from those mines will be higher than what we have today. Because some of them are with zero premium, some of them are with high premium. The qualities are different," the official said. 

 

For its downstream operations, the company's previously announced expansion plans are progressing well, and are on track to be completed within the next 30 months, the management said. "The 300 kilo (300,000) tonne capacity expansion in tin plate and the hot roll pickling and galvanizing project of 0.74 million (740,000) tonnes are both on track for completion within the next 30 months."

 

The company's 500,000 tonne Combi mill in Jamshedpur has been commissioned and is midway through its ramp up, as per the management. "We plan to add about 0.42 million tonnes of tube capacity also during the financial year 2027 through an asset light model," the official said. 

 

Notably, the management said that the capital allocation for India operations will not be dependent on Europe business. "It will follow its own course. It will continue to grow in both upstream and downstream. So that is the framework within which we are looking at," the official said.

 

 

The June quarter operational performance was challenged by higher energy prices, rise in freight costs, and supply of raw materials, on account of the geopolitical crisis in West Asia, according to the management.

 

To a question on the sharp rise in depreciation and amortisation expenses for the June quarter, which rose 31% on year and 14% on quarter to INR 36.40 billion, a senior official said this was due to the fact that the company had accelerated the depreciation of certain mining assets which will come up for re-auction in 2030. So, the higher depreciation and amortisation was due to this "regulatory need", he said.

 

The management said the price contracts with its automotive customers in India were negotiated towards the end of the June quarter and some of the benefits from the upward revisions had accrued in the June quarter and some will flow into the September quarter.

 

Tata Steel had announced its June quarter earnings Thursday. The company's consolidated net profit for the June quarter grew nearly 12% on year to INR 23.18 billion. The company's consolidated revenue from operations increased 14% on year to INR 607.94 billion.

 

Friday, shares of the company closed 1.5% higher at INR 189.69 on the National Stock Exchange.  End

 

Edited by Akul Nishant Akhoury

 

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