Tata Steel, one of India’s leading steel makers, has reported a sharp decline of 84% in its consolidated net profit for the quarter ending March 2023. The company’s net profit stood at Rs 1,566 crore during the period, down from Rs 9,835 crore in the same quarter last year. The decline was attributed to lower income, which saw the steel major’s total income drop to Rs 63,131 crore from Rs 69,616 crore in the corresponding period last year.
Tata Steel’s total expenses, on the other hand, rose to Rs 59,918 crore from Rs 57,636 crore a year ago. The company’s board has recommended a dividend of Rs 3.6 per equity share of Re 1 each to the shareholders for FY23, according to a filing with the Bombay Stock Exchange (BSE).
The pandemic-induced disruptions in supply chains and demand for steel have been one of the major challenges faced by Tata Steel in recent years. Despite the challenges, the company had managed to post a robust financial performance in the previous fiscal year, largely due to strong domestic and international steel prices. However, the latest quarterly results reflect the volatility in the steel market.
The steel industry has been grappling with rising raw material costs, including iron ore and coal, which has put pressure on margins. Moreover, the industry is facing stiff competition from cheaper imports, particularly from China, which has led to excess capacity in the global market.
Tata Steel has been taking measures to improve its operational efficiency and reduce costs. The company has been investing in technology and automation to enhance productivity and has also been focusing on reducing its carbon footprint. In December 2022, the company had announced its plans to become a net-zero carbon company by 2050, which involves reducing carbon emissions across its operations and supply chain.
The steel major has also been looking to expand its business in India and overseas. In March 2023, Tata Steel had announced the acquisition of a majority stake in Bhushan Energy Limited (BEL), a subsidiary of Bhushan Steel, which will give the company access to BEL’s 4.5 million-tonne-per-annum steel plant in Odisha.
Tata Steel’s European business, which operates in the UK and the Netherlands, has also been showing signs of recovery after posting losses for several years. In March 2023, the company had announced that it had reached an agreement with its European works council to secure the future of its UK and Dutch operations. The agreement involved a commitment to invest in the business, reduce carbon emissions, and create new jobs.
Despite the challenges faced by the steel industry, Tata Steel remains optimistic about the future. The company believes that the long-term demand for steel will remain strong, particularly in emerging markets like India, and is confident of its ability to compete in the global market. However, the company will need to continue to focus on improving operational efficiency, reducing costs, and investing in technology to stay ahead of the competition.
