Tata Steel eyes net profit at UK unit this fiscal: N Chandrasekaran
Addressing shareholders at Tata Steel's annual general meeting on Wednesday, Chandrasekaran, who also chairs the steelmaker, said the aim was for the UK operations to achieve net profitability this fiscal year.
'I feel that UK should be PAT (profit after tax) positive, so the company is working towards making it profitable,' said Chandrasekaran, echoing shareholder concerns. 'We expect UK this year to perform much better than last year and it will definitely be Ebitda positive.'
To be sure, Narendran had said in an analyst call in May that the UK business was expected to be earnings before interest, taxes, depreciation, and amortization (Ebitda) positive.
'We are pursuing the goal of ensuring, on an underlying basis, Tata Steel UK becomes Ebitda positive and sustaining from a cashflow point of view,' he had said during the post-earnings interaction on 13 May.
Tata Steel UK follows a downstream-focused model, importing semi-finished steel substrates from its operations in India and the Netherlands—or sourcing them from the open market at lower cost—and processing them at its UK mills.
The shift to profitability, analysts believe, has been aided by a strategic move to shut down its loss-making blast furnace.
The company reported a consolidated profit of ₹ 1,201 crore in January-March, more than doubling from the same period last year. This was after losses in the Netherlands and the UK offset the company's profitable operations in India.
Tata Steel's standalone operations in India logged a net profit of ₹ 3,141 crore during the quarter, 19% less than the same period a year ago due to lower steel prices.
'It is possible for Tata Steel's UK business to break even because they have shut down their blast furnace,' said Rohit Sadaka, director at India Ratings & Research. 'There will be a significant reduction in fixed cost overheads along with reduced losses.'
Tata Steel acquired the European operations of Corus Group for £6.2 billion (around $12 billion) in 2007. Since then, its UK business has struggled with legacy costs and sluggish demand in Europe.
Under Narendran, the company has pursued a range of restructuring efforts to revive its European operations. These include layoffs, cost rationalization, and a pivot to more efficient electric arc furnace (EAF) technology.
According to a report by ICICI Direct, the company is 'undergoing significant restructuring at its European operations aimed at improving profitability.' In the UK, Tata Steel is building a 3.2 million tonnes per annum (MTPA) EAF facility, expected to be commissioned by 2027, with £500 million in support from the UK government as part of a total capex of £1.25 billion.
Meanwhile, in the Netherlands, the company plans to replace one of its two blast furnaces with a direct reduced iron (DRI) and EAF setup by 2030 as part of its broader green steel transition.
Tata Steel has also launched a company-wide cost transformation programme targeting savings of ₹ 11,500 crore in FY26. This includes ₹ 4,000 crore from Indian operations, ₹ 4,500 crore from the Netherlands, and ₹ 3,000 crore from the UK.
Capex plans for the current fiscal stand at ₹ 15,000 crore, earmarked for plant maintenance, capacity expansion, European restructuring, replication of EAF projects in western and southern India—including the one in Ludhiana—and the acquisition of mining assets to support raw material security.
Shares of Tata Steel rose 5.8% on Wednesday to close at ₹ 165.88 on the National Stock Exchange.
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