Tata Steel will drive Europe business to self-sufficiency

2019-05-23

May, 23, 2019 - With the proposed joint venture with German steel giant Thyssenkrupp now abandoned, Tata Steel will focus on making its European business self-sustainable. 

Mr Koushik Chatterjee, executive director and chief financial officer of Tata Steel, said that the market can expect more clarity on the company’s European operations within 6-8 months. He said “Structurally, we’re in a much stronger position with 19 million tonnes capacity in India, which will become 24 million tonne in the coming 24-28 months. We have a business in Europe that we will drive to self-sufficiency and cash profitability that will compete with European peers. 

At a consolidated basis, our Ebitda margin is 18%, globally on the top end of the benchmark. We’re not in a weak position and neither are we looking at this from the short-term optimization point of view. The long-term point of view is that we want to get to a structural outcome similar to that of the JV. As far as debt is concerned, that journey is irrespective. We would like to be debt at 3x Ebitda and so long as we are in the INR 90,000 crore mark (of debt) we should be okay. We’ve announced that we will reduce debt by USD 1 billion this year. This is a question of becoming stronger to create more appetite for growth. We want to be leaner and once the 5mt in Kalinganagar is implemented, there will be a further increase in our earnings capability and opportunity to deleverage. That’s 24 months away. So from now on to then, this USD 1 billion-plus annual exercise will bring debt down substantially. 

I don’t think that we are in desperation or in a weak position to negotiate. We’ve done huge restructuring in Europe and have invested in asset configuration in the Netherlands. The very reason that the European Commission sees our asset configurations as strong, it means we can drive more value.”