Indian Operations Shine as Production Reaches Record Highs

Tata Steel's Indian operations have emerged as the cornerstone of the company's financial resilience in FY2025, achieving unprecedented production milestones amid global market volatility. The India business delivered an impressive EBITDA of ₹29,285 crores with a robust margin of 22%, significantly outperforming the consolidated group margin of 12%. This stellar performance was underpinned by record-breaking crude steel production of 21.7 million metric tons and deliveries of 20.9 million metric tons, representing a 5% year-on-year growth. The successful commissioning and ramp-up of India's largest blast furnace at Kalinganagar, expanding capacity by 5 million metric tons annually, played a pivotal role in this achievement. Additionally, Neelachal Ispat Nigam Limited reached full rated capacity during the year, further bolstering the company's domestic production capabilities. T.V. Narendran, Chief Executive Officer & Managing Director, highlighted the company's strengthening position in key segments, noting that "Tata Tiscon achieved 'best ever' volumes and grew by 19% year-on-year to around 2.4 million metric tons," while maintaining Tata Steel's status as "the preferred supplier for automotive steel, with high share of business in new model launches."

European Operations Show Signs of Stabilization After Strategic Pivot

Tata Steel's European operations presented a mixed picture in FY2025, with strategic restructuring beginning to yield positive results despite continued challenges. The Netherlands unit reported revenues of €6,273 million and an EBITDA of €90 million, with operations stabilizing to produce approximately 6.75 million metric tons of liquid steel. Deliveries increased significantly by 17% year-on-year to 6.25 million metric tons, with the fourth quarter reaching 1.75 million metric tons, the highest in six years. Meanwhile, the UK operations recorded revenues of £2,321 million but continued to face headwinds with an EBITDA loss of £385 million on deliveries of 2.51 million metric tons. However, the company's transition to a purchased substrate-based downstream production model in the UK has successfully reduced fixed costs by 23%, or approximately £230 million. This strategic pivot follows the safe decommissioning of two blast furnaces in the UK as part of Tata Steel's broader restructuring efforts. The company has also secured planning permission for its Electric Arc Furnace project at Port Talbot, with site activity scheduled to commence in July 2025, marking a significant step toward more sustainable steelmaking in the UK.

Financial Performance Demonstrates Resilience Amid Market Volatility

Despite operating in a challenging global steel market characterized by price pressures and surging imports in key markets, Tata Steel delivered a resilient financial performance in FY2025. Consolidated annual revenues stood at ₹218,543 crores, while EBITDA improved by 10% year-on-year to reach ₹25,802 crores, translating to a margin of approximately 12%. The fourth quarter showed sequential improvement, with consolidated revenues increasing by 5% quarter-on-quarter to ₹56,218 crores, driven by rising deliveries across all geographies. The company's profit before tax before exceptional items for the full year was ₹9,267 crores, while reported profit after tax stood at ₹3,174 crores. The Board of Directors has recommended a dividend of ₹3.60 per ordinary equity share of face value of ₹1 each, reflecting confidence in the company's financial position despite ongoing challenges. Tata Steel's group liquidity remains strong at ₹38,791 crores, including cash and cash equivalents of ₹12,222 crores, providing a solid foundation for navigating market uncertainties while pursuing strategic growth initiatives.

Strategic Investments Position Company for Sustainable Growth

Tata Steel continues to make significant strategic investments to enhance its competitive position and sustainability credentials. The company spent ₹3,220 crores on capital expenditure during the fourth quarter and ₹15,671 crores for the full year, demonstrating its commitment to long-term growth despite short-term market challenges. The 5 million metric ton blast furnace at Kalinganagar is ramping up production, while the phased commissioning of a 2.2 million metric ton Cold Rolling Mill complex is progressing well, with Continuous Galvanising lines expected to be commissioned in the coming months. These investments are strategically aligned with Tata Steel's focus on high-value products for automotive and other premium segments. Additionally, construction is underway for an Electric Arc Furnace in Ludhiana, reflecting the company's commitment to more sustainable steelmaking technologies. The company has also invested more than ₹1,600 crores in research and development over the past five years, enabling it to become "the first Indian steel supplier to have end-to-end capabilities in hydrogen transportation" and to localize advanced automotive grade steel CP780, highlighting its customer-centric innovation approach.

Segment Performance Highlights Diversification Strategy

Tata Steel's segment-wise performance reveals the effectiveness of its diversification strategy across product categories and customer industries. The company's automotive steel business continues to thrive, maintaining a high share of business in new model launches across the Indian market. This success in the high-margin automotive segment has helped offset challenges in other areas affected by import pressures. The construction segment also showed remarkable growth, with Tata Tiscon brand achieving record volumes of approximately 2.4 million metric tons, representing a 19% year-on-year increase. In a strategic move to expand its presence in promising sectors, the company has begun catering to commercial shipbuilding, opening up new revenue streams in an industry with significant growth potential. The mining division marked a historic milestone with a century of operations at Noamundi, mining approximately 40 million metric tons of iron ore across its mines in India during FY2025. This vertical integration continues to provide Tata Steel with a competitive advantage through secured raw material supply, particularly valuable during periods of commodity price volatility.

Sustainability Achievements Reinforce Industry Leadership

Tata Steel's commitment to sustainability has once again received global recognition, with the company being named a Sustainability Champion by the World Steel Association (worldsteel) for the eighth consecutive year. This prestigious acknowledgment underscores Tata Steel's leadership in environmental stewardship and responsible business practices within the global steel industry. The company's investments in research and development have yielded significant breakthroughs in sustainable technologies, including end-to-end capabilities in hydrogen transportation—a critical component for future low-carbon steelmaking. The strategic shift toward Electric Arc Furnace technology in both India and the UK reflects Tata Steel's determination to reduce its carbon footprint while maintaining production capabilities. These initiatives align with the company's long-term vision of transitioning to more environmentally friendly production methods while maintaining its competitive edge in key markets. The sustainability focus extends beyond environmental considerations to encompass social responsibility, with the company continuing its century-long tradition of community development across its operational locations.

Accounting Policy Change Enhances Financial Transparency

In a move toward greater financial transparency, Tata Steel has voluntarily changed its accounting policy in accordance with Ind AS 8 "Accounting Policies, Changes in Accounting Estimates and Errors." The company will now measure its equity investments in subsidiaries in the Standalone financial statements at fair value through other comprehensive income as per Ind AS 109 "Financial instruments," rather than at cost less impairment as previously done under Ind AS 27 "Separate Financial Statements." This change has been applied retrospectively and is intended to provide "reliable and more relevant information about the effects of transactions, other events or conditions on the entity's financial position and financial performance to the users of financial results/statements." The policy change reflects Tata Steel's commitment to maintaining high standards of corporate governance and financial reporting, particularly important given its complex corporate structure with operations across multiple geographies. While this accounting change does not affect the underlying business operations, it provides stakeholders with a more accurate representation of the company's financial position, enhancing their ability to make informed investment decisions.

Outlook Remains Cautiously Optimistic Despite Challenges

Looking ahead, Tata Steel maintains a cautiously optimistic outlook despite ongoing challenges in the global steel market. The company's strong performance in India, which continues to be one of the world's fastest-growing major economies, provides a solid foundation for future growth. The strategic investments in capacity expansion and product development are expected to strengthen Tata Steel's competitive position in high-value segments. However, the European operations continue to face significant challenges, particularly from surging imports and high energy costs. The transformation program launched in the Netherlands in April 2025 aims to restore long-term competitiveness, while the transition to Electric Arc Furnace technology in the UK represents a fundamental shift in the business model. The company's robust liquidity position of ₹38,791 crores provides financial flexibility to navigate market uncertainties while pursuing strategic initiatives. With net debt standing at ₹82,579 crores, managing the balance sheet remains a priority, though the company's strong cash generation capabilities from Indian operations offer reassurance to investors concerned about leverage levels.

Key Takeaways:

• Tata Steel achieved a consolidated EBITDA of ₹25,802 crores for FY2025, up 10% year-on-year, with Indian operations delivering an impressive 22% EBITDA margin while setting new records with 21.7 million metric tons of crude steel production and 20.9 million metric tons of deliveries

• The company's European restructuring is showing early positive signs, with Netherlands operations increasing deliveries by 17% year-on-year to 6.25 million metric tons, while UK operations have reduced fixed costs by 23% (approximately £230 million) through transitioning to a purchased substrate-based production model

• Strategic investments continue with ₹15,671 crores spent on capital expenditure for the full year, including the ramp-up of India's largest blast furnace at Kalinganagar and progress on Electric Arc Furnace projects in both Ludhiana and Port Talbot, positioning the company for more sustainable growth