Tata Steel 'Not Out Of Woods Yet', Efficiency Measures Improved Profit: CEO

Tata Steel Ltd. is still not out of the woods and has been deploying operation efficiency measures to improve the bottom line, according to its top executive.

"I think the steel industry is a cyclical industry and oftentimes the externalities are conspiring against us," T V Narendran, chief executive officer and managing director of Tata Steel, told NDTV Profit in a televised interview on Thursday.

"We are going through a period where market conditions have been quite tough, both in Europe and in India," he said, adding, Tata Steel has taken action on what can be controlled, like cost, efficiencies, capital assets and others. "That work is going on."

The difficult market scenario has seen steel and coal prices drop across geographies, he said. "It has been a challenging, but not bad, quarter."

The steel maker swung back into the black with a net profit of Rs 759 crore in the quarter ended Sept. 30, 2024. In the year-ago period, Tata Steel had posted a net loss of Rs 6,511 crore on account of a Rs 3,255-crore provision of impairment of non-current assets.

Despite lower revenue growth, the company's Ebitda and margins were aided by a Rs 746.59 crore reversal in inventory changes, 1.3% lower cost of materials consumed, and 11% lower other expenses on an annual basis.

In the second quarter, Tata Steel had a $20 advantage on coal prices compared to the first quarter on coal prices and a $10 advantage in iron ore price, he said. "In the third quarter, we are expecting another $20 advantage in coal prices, in both Europe and India." We focused a lot on many operating efficiencies that translated into the bottom line as well, he said.

Narendran expects India's realisation to be Rs 2,000 lower in the third quarter compared to the previous quarter. "We are not out of the woods yet."

The demand has been strong in India, although construction and government spending has been weaker than expected, but it is expected to pick up, Narendran said. "Demand is okay, but the problem is more about margins because of the threat of imports and international sentiments."