LOOKING FORWARD TO THE NEXT LEAP OF GROWTH
It has been a remarkable year for Tata Steel Long Products and I take this opportunityto thank all of you and my dear colleagues for providing steadfast support at every turnof our journey during the year. We have together lived through one of the most tryingphases of the pandemic. I hope you and your families are well and safe.
Having undergone a degrowth in FY 2020-21 the global economy registered robust growthin FY 2021-22 supported by a strong demand recovery post the vaccination roll-out andwithdrawal of restrictions imposed at the height of the pandemic. As the world wasemerging from the pandemic the war in Ukraine has triggered another geopolitical crisiscreating significant macro uncertainties. As elsewhere in the world economic recovery inIndia was supported by well-considered fiscal and monetary policy measures. India's GDP isestimated to have expanded 8.7% in FY 2021-22 against a contraction of 6.6% in FY 2020-21.
Rise of steel
The strong economic recovery has been mirrored in the strong uptick in India's steelindustry bolstered by pent-up demand. Supported by government spending on infrastructureand the revival of the automotive sector India is expected to witness robust steel demandgrowth of 7-8% in 2022. Although rising raw materials prices inflation and supply-sidepressures might moderate this growth the long-term demand drivers for the steel industryremain strong.
Set to grow
Tata Steel Long Products is well poised to capitalise on the opportunities in the LongProducts industry. Over the past few years it has been steadfastly integrating andstabilising the acquired facilities of Usha Martin. The improvement and de-bottleneckingjourney continues for existing facilities.
The Company is also set to grow as per its defined strategic roadmap to secure aleadership position in the chosen segments of Automotive and Construction. The Companythis year has further strengthened its growth potential with the acquisition of NeelachalIspat Nigam Limited (NINL) which is in its final stages for a total consideration ofRs.12100 crore. This proposed acquisition will add 1 MnTPA to the Company's steelmakingcapacity together with iron ore reserves of around 100 MnT.
The bigger picture
Strategically the location of the NINL presents opportunities to leverage synergieswith the existing infrastructure of Tata Steel at Kalinganagar. Sharing best operatingpractices and expertise in mining as well as project management has the potential tocreate significant value for stakeholders. NINL has the potential to be the hub for longproducts business in future. This would help the Company to diversify its productportfolio to branded products and downstream solutions in addition to specialty high-endsteel products. We expect to begin operations at NINL within six months after the closureof transactions and going forward the plant's rated billet making capacity of ~1 MnTPAwill be ramped up in phases following all requisite clearances.
The resilience demonstrated by the Company amidst the disruptions caused by thepandemic resulted in one of its best-ever performances in FY2021-22. The Company remainedfirm and committed to all its stakeholders and introduced several people centric policiesto support employees and their families during these difficult times.
It achieved higher than planned sales through a scenario- based approach despiteoperational issues and various disruptions. TSLP grew its top-line by 43% (Y-O-Y) toRs.6802 crore. Focus on operational and cost efficiencies led to the Company reportingits highest ever EBITDA of Rs.1289 crore during the year compared to Rs.1154 crore in FY2020-21. Strong capital management and deleveraging of the balance sheet also grew thebottom line (Profit before Tax) to Rs.858 crore from Rs.615 crore in FY 2020-21 (40%increase on Y-O-Y basis). The Company has pre-paid debt of Rs.636 crore and is now netdebt-free (barring NINL). The Company Credit Rating score has improved from INDAA toINDAA+.
During the year the Company has progressed on its journey to make Tata Steel LongProducts structurally financially & culturally future ready. Infrastructurestrengthening and scaling new heights in operations remained the key focus area. TheCompany has demonstrated benchmark performance in new product development and peoplepractices. The Company has received awards and acknowledgements in different externalassessments.
It successfully crossed 600+ level in CII HR excellence award. The year also saw usaccelerate our digital transformation journey and resolutely adopt Industry 4.0 practicesand technology. Digital will be a key enabler in strengthening our competitiveness byimproving efficiencies and deepening relationships with our customers people and businesspartners through enhanced convenience and experience.
At the core of our growth objective is our performance on Environmental Social andGovernance parameters.
We already have a long-term ESG strategy on which we are progressing confidently.During FY 2022-23 we will be looking at strengthening systems and processesstriving for business excellence through the implementation of better safetypractices and capability building. The community remains at the heart of our operations.In keeping with the Tata ethos we will be prioritising the promotion of inclusive socialdevelopment through our CSR initiatives in health education sanitation and livelihoodenhancement.
A big thank you to my colleagues at TSLP the Board and investors for being by our sideand helping us steer through the many challenges towards newer horizons.