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Tata Steel looks at reducing debt by at least $1 billion in FY22

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Tata Steel posted a consolidated net profit of Rs 7,161.91 crore for the quarter ended March 2021, mainly on account of higher income. The company had reported a net loss of Rs 1,615.35 crore in the year-ago quarter, Tata Steel said in a BSE filing. The revenue rose around 40 percent and India EBITDA per tonne came in well above estimates. Koushik Chatterjee, ED and CFO at Tata Steel discussed the numbers as well as shared his outlook for the business going forward.

Tata Steel posted a consolidated net profit of Rs 7,161.91 crore for the quarter ended March 2021, mainly on account of higher income. The company had reported a net loss of Rs 1,615.35 crore in the year-ago quarter, Tata Steel said in a BSE filing.
The revenue rose around 40 percent and India EBITDA per tonne came in well above estimates. Koushik Chatterjee, ED and CFO at Tata Steel discussed the numbers as well as shared his outlook for the business going forward.
“Our efforts on cost reduction continues,” he said. “Couple of years back, we had said we will de-lever by a billion dollars every year. So that was more like an enterprise policy and strategy. We did it in 2018-2019, we were not able to complete that in 2019-2020 because the markets were depressed. Last year, based on multiple initiatives on working capital, the way we managed cost and the way the prices moved, we were able to do much more than that. So we will certainly do one billion this year but there is scope to maximise as much as we could do.”
“We will continue to deleverage. Once you take out debt, you create an appetite in your balance sheet and therefore it is not about keeping money for expansion, you just keep reducing your debt profile which will give more appetite for strategic growth in the future. So USD 1 billion is taken as granted,” he added.
There has been a significant increase in raw material prices. As far as the steel prices are concerned, it has been much higher internationally than in India.
“International steel prices are 10-15 percent higher than Indian prices,” he said.
“In India, we are going through unprecedented times and we have had increases in Q1 compared to Q4 and typically it lags the international prices by two-five months depending on the situation, that is the kind of price increases that we are hoping to get in Q1,” he added.
He believes Europe will generate positive earnings and cash flow performance in the future, especially in this year.
“At this point of time it is fairly clear that Tata Steel Europe will be cash positive at the end of FY22,” he stated.
On Tata Steel BSL, he mentioned, “It is in a fairly advanced position, we have completed the shareholder’s approval, we have filed it with NCLT, we are waiting for the final hearing. It will happen very soon.”
For the full interview, watch the video.

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