Operating Context
Changing envirnment.
Offering new opportunities.

The year 2021 started on an optimistic note for the Indian economy with increasing demand. However, the second wave of COVID-19 posed renewed uncertainties and consequent volatilities. However, at Tata Metaliks, we remained resilient with strong oversight on economic and industry developments and megatrends that shape our opportunity landscape. Accordingly, we recalibrated our action plans to capitalise on emerging opportunities to sustain our growth trajectory.

Indian economy is bouncing back strongly

The Indian economy is bouncing back strongly, domestic consumption is increasing and industrial production is nearing pre-COVID levels driven by the reforms implemented to boost business ecosystem. India's real gross domestic product (GDP) growth in
FY 2021-22 was ~8.7%, making it one of the fastest growing major economies.

Our response

We maintain a close watch on the evolving trends in the global metals and mining landscape for shaping our way forward. Our leadership takes cognisance of these global developments to fine tune our operational strategies. Our operational roadmap ensures sustainable growth and value creation.

Fast tracking digital transformation

Digital technologies are changing the world and dramatically improving the way organisations operate. Today, steel and metals manufacturers face a huge opportunity to transform their operational model by implementing digital technology, enabling them to improve operational efficiency, customer service, inventory levels and profit margin.

Our response

We have undertaken a robust digital transformation journey. Three prioritised themes mark our Digital Transformation programme -'Real time Data & Analytics’, ‘Robotics’ and ‘Business on Mobile’. In 2020, Automation and Digitalization (A&D) was aspirational for TML, but within two years, A&D has become a reality and imperative for long-term sustainability. Today, TML is well poised to establish A&D as a core competency through a culture of innovation, learning and capability building (hiring, learning and development, collaboration), and an enterprise-wide thrust to implement digital and realise organisational goals.

PI demand remains stable

India is a major manufacturer and exporter of Pig Iron (PI) in the world. It was reeling under muted demand in Q4 FY 2020- 21. Moreover, COVID-19 pandemic and associated lockdowns coupled with labour unavailability in foundries resulted in a steep fall in the demand in Q1 FY 2021-22. PI business recovered strongly on account of surge in steel and commodity prices. Moreover, export of PI helped mitigate the shock to some extent subsequently as many large manufacturers diverted large supplies to export market. Going forward, PI demand is expected to increase in line with the GDP growth of the country; as the engineering industry gets a fair boost with full recovery of the economy.

Our response

We manufacture around 5.6 lakh tonnes of hot metal annually, of which over 2 lakh tonnes are converted to DIP and the rest into PI. We will continue to take advantage of the opportunities of PI and DIP by increasing market share by delivering superior quality, differentiated product offering and ensuring on-time delivery.

Scaling water infrastructure

India has 18% of the world’s population, but only 4% of its water resources, making it among the most water-stressed in the world. The Prime Minister launched Jal Jeevan Mission, that envisions to provide safe and adequate drinking water through individual household tap connections by 2024 to all households in rural India. The programme will also implement source sustainability measures as mandatory elements, such as recharge and reuse through grey water management, water conservation, rain water harvesting etc. The budgetary allocation for Jal Jeevan Mission has been increased beyond `60,000 crore, which shows the priority being accorded by the Government of India to provide safe drinking water to rural households.

Our response

We are certain that our business’ long-term growth drivers remain intact because we operate in a sector that is critical to India’s socio-economic progress. In keeping with our strategic priority of ‘Focus on Downstream/Value-add,’ we are steadily expanding our DIP business.

Net-zero transition

There is an evolving coalition of countries, cities, businesses and other institutions pledging to get to net-zero emissions. More than 70 countries, including the biggest polluters – China, the United States, and the European Union – have set a net-zero target, covering about 76% of global emissions. Over 1,200 companies have put in place science-based targets in line with net zero, and more than 1,000 cities, over 1,000 educational institutions, and over 400 financial institutions have joined the Race to Zero, pledging to take rigorous, immediate action to halve global emissions by 2030.

Our response

We are committed to optimise water consumption, reduce wastes, reduce carbon and energy footprints. Our Board has adopted a long-term decarbonisation strategy for becoming carbon neutral in line with United Nations Sustainable Development Goals (UNSDGs). We are implementing environmental-friendly practices to keep our operations sustainable in the long-term. Moreover, we have increased our internal carbon pricing for capital and revenue expenditures, thereby affirming our actions for reducing our carbon footprint.

Raw Material Challenges
Navigating realities.
Emerging strnger.

The year under review,
witnessed significant inflationary
pressure on key raw materials -
iron ore, coal and coke.

Iron ore lumps and fines

During FY 2021-22, the average price of iron ore lumps crossed `11,300/tonne and iron ore fines crossed `8,000/tonne primarily due to:

  • Some of smaller merchant miners in Odisha exhausted their EC Limit
  • Improved exports driven by pellets to EU in view of the Russian-Ukraine war pushed up price of domestic iron ore
  • Sponge and Pig Iron prices also rose substantially; hence, demand for iron fines was evident from active participation of buyers in OMC auctions leading to near complete sell-out

During the year, on account of the increase in royalty on iron ore vide an amendment in Mines and Minerals (Development and Regulation) Act, our margins were severely impacted

Coal and coke price trend

During FY 2021-22, the average price of coal surged from ~US$100-110/tonne levels to ~US$ 600/tonne, primarily due to:

Coal

  • Disruption and uncertainty in Coal availability due to continuing geo-political tensions
  • Wet climate in Australia causing disruption in loading and extended waiting period
  • Strong restocking demand from Asian market and almost nil spot availability

Coke

  • Increase due to high input cost of coking coal causing higher cost of production of coke
  • Domestic coke prices in Eastern India increased by ~20% q-o-q
  • Strong export markets have encouraged coke manufacturers to export, which increased coke prices in Eastern India