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)
FY 2021-22 was ~8.7%, making it one of the fastest growing major economies.
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.
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.
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.
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.
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.
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.
The year under review,
witnessed significant inflationary
pressure on key raw materials -
iron ore, coal and coke.
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:
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
During FY 2021-22, the average price of coal surged from ~US$100-110/tonne levels to ~US$ 600/tonne, primarily due to: