Tata Steel Aims To Cut Gross Debt By USD 2 Billion, To Mobilise Capital Expenditure

Tata Steel (TSL) is planning to effect an over $2 billion (Rs 14,600 crore) reduction in its gross debt during the current financial year, while mobilising a capital expenditure between Rs 10,000 and Rs 12,000 crore.
The company, which has been a key beneficiary of rising steel prices, is also enhancing its sustainanibility metrics across the value chain, from projects focused on carbon emission reductions to water management and biodiversity.
According to the company’s investor presentation released on Monday, its financial strategy targets for FY22 include achieving a “$2 billion+ gross debt reduction while prioritising off-shore debt pre-payment; continued focus on capital allocation, cashflow and working capital management; and capex of ~Rs 10,000-12,000 crore.”
A research note by Motilal Oswal had said that Tata Steel has been a key beneficiary of rising steel prices.
While margins have been strong in India over the past few quarters, its Europe unit (Tata Steel Europe) has suffered.
However, Motilal pointed out that this is now likely to change.
“Europe should see a sharp jump, with EBITDA per tonne expected to cross $250 per tonne by the third quarter of FY22. The deleveraging cycle should continue, with consolidated net debt expected to fall by 32% year-on-year in 2022,” it said.
According to Tata Steel, its EBITDA per tonne has soared in Q1 of FY22. From Rs 6,267 per tonne in FY20 and Rs 10,838 per tonne in FY21, the company has recorded over double this figure in Q1FY22 at Rs 22,779 per tonne.
It’s overall EBIDTA margin has also shot up to 30.3% in Q1FY22 from 19.8% in FY21.TSL is also enhancing its sustainability metrics.
It aims to reduce carbon emissions to less than 2 tonnes of CO2 for every tonne of crude steel produced by 2025, which is line with targets set by the government.