Tata Steel aims to double its capacity sustainably in India. With a net debt of `77,550 crore as of March 31, 2024, it seeks to deleverage and fund the growth through internal accruals and raising external capital from banks and capital markets. The transition to sustainable steelmaking in the Netherlands and the UK also requires significant capital investment.
However, global financial interconnectivity, heightened climate action and sustainability expectations, and stringent ESG standards may impact borrowing costs.
Geopolitical tensions and the financialisation of commodities might also increase raw material costs and financial market volatility, impacting the cost of capital and exacerbating the impact of INR depreciation against the USD.
Mitigation
The economic slowdown in China has disrupted global steel trade volumes impacting adversely global and Indian steel prices, affecting the Company’s business in India, the UK, and the Netherlands.
Fast-paced technological changes and shifting customer preferences may necessitate the adoption of newer grades of steel and advanced materials.
Mitigation
The global metals and mining industry faces stringent regulations due to geopolitical conditions, trade patterns, tariffs, protectionist policies and increased focus on ESG disclosures. Non-adherence may impact business operations and reputation.
Mitigation
External factors such as extreme weather conditions and natural disasters and internal factors such as equipment failures, maintenance delays, process safety-related incidents, and ageing assets can potentially disrupt operations, safety, and customer service levels.
Mitigation
Integrated steel plants have hazardous operations, adversely impacting the health and safety of the workforce, which in turn may negatively affect business operations and the Company's reputation across geographies.
Mitigation
The communities proximate to Tata Steel’s operating locations, particularly in Europe, have growing expectations. An inability to address expectations may lead to reputation loss, fines imposition, and jeopardise licence to operate and business continuity.
Mitigation
As Tata Steel expands in India and transitions to green steelmaking in the UK and the Netherlands, it faces infrastructural stress, geopolitical tensions, and stringent ESG norms impacting supply chain reliability and costs. Government policies also pose risks to the supply chain.
Mitigation
The Company’s operations significantly rely on IT and digital infrastructure, which makes it vulnerable to cyber-attacks, data risks and technology obsolescence.
Non-compliance to stringent IT legislations and regulations may lead to the imposition of penalties and an adverse impact on the Company’s reputation.
Mitigation
Various geopolitical events, weather disruptions and mining issues may lead to high price volatility and supply chain disruptions, reducing reliability and impacting inventory.
Tata Steel’s operations in the UK and the Netherlands are significantly dependent on raw material imports and, hence, exposed to volatility in raw material prices and availability. All these may lead to higher costs and cash outflows.
Mitigation