It is a privilege to write to you as the Chairman of the Board of Tata Steel.
Financial Year 2018-19 was a good year for your Company, wherein your Company executed well on its strategic roadmap and delivered a strong financial performance.
Last year in my communication to you, I shared with you the Company’s strategy to leverage the growth potential of the Indian economy by pursuing both organic and inorganic growth opportunities. I am happy to share with you that your Company has made significant progress in this regard. Your Company undertook the following tangible steps to strengthen and expand the India operations.
Your Company successfully completed the acquisition of Bhushan Steel (now named Tata Steel BSL) under the Insolvency and Bankruptcy Code process. This was an important strategic acquisition. The integration is proceeding well with identified synergies and roll-out of the performance improvement plan. The Board has given the approval for the amalgamation of Tata Steel BSL with your Company and the process is currently underway. This would further help in realising synergies and create a unified and simple organisation.
In addition to Tata Steel BSL, your Company also acquired the steel business of Usha Martin Limited, through its subsidiary company, Tata Sponge Iron Limited. This acquisition has strategically enhanced the value-added long product portfolio of your Company and expanded its presence in the premium and niche segment for automotive customers.
Your Company continues to grow its India capacity through brownfield expansion of the Kalinganagar facilities.
In Europe, your Company’s operations continued to face challenges. The production was lower due to operational issues at both sites in the UK and IJmuiden.
On a consolidated basis, your Company achieved the highest ever levels of revenues and EBITDA this year. I am happy to report that the Company has generated positive free cash flows of ₹8,839 crore this year, for the first time in over a decade.
As you are aware, your Company had proposed to form a joint venture with thyssenkrupp to combine the steel businesses in Europe, as a part of the effort to build a sustainable business in Europe. Unfortunately, this proposal has not met with the approval of the European Commission and your Company has decided not to continue on this path.
Your Company’s overall situation is much better now. Your Company’s India capacity and contribution has expanded significantly. The plant in the UK contributes to 11% of your Company’s total capacity and the plant at IJmuiden contributes to 22% of your Company’s capacity. Your Company is on the path to drive operational improvement and positive cash flows.
Steel is a strategic material for growth and development of nations and has a multiplier impact on the economy and society. India has the unique advantage of a young and aspirational population and high economic growth, which would drive sustained demand for industries such as steel. India also has a large natural resource base and skilled manpower to be one of the most competitive manufacturers of steel globally. While the short-term global macroeconomic and geopolitical situation may continue to throw some challenges, the future holds many opportunities for your Company. Your Company is well positioned to capitalise on the opportunities and deliver strong growth.
I would like to thank all the shareholders for their faith in and support to the Company. I would also like to thank all other stakeholders, including the employees, unions, customers, government and suppliers, for their continued support.
Chairman of the Board