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Tata Steel to cut capex to Rs 8,000 crore in FY20 amid slowdown

The top Tata Steel official said in order to insulate the steel industry from its cyclical nature, the company is focusing on strengthening the branded consumer business and downstream product portfolio

twitter-logo PTI   Kolkata     Last Updated: August 10, 2019  | 21:24 IST
Tata Steel to cut capex to Rs 8,000 crore in FY20 amid slowdown

Facing headwinds amid a slowdown in the economy, Tata Steel Ltd on Saturday said it is likely to revise the planned capital expenditure for the 2019-20 fiscal to Rs 8,000 crore from Rs 12,000 crore.

The steel sector is expected to see a pick up in the second half of the year, a top company official said.

"We have given a guidance that the capex will be 20-25 per cent lower than the original plan between Europe and India (operations)... our original estimate was Rs 12,000 crore for the Tata Steel Group... it will now be around Rs 8,000 crore," Tata Steel CEO and MD T V Narendran said.

Of the Rs 12,000 crore, the steel major had initially planned to spend around Rs 8,000 crore on India operations.

"Both sides (India and Europe) will take a cut," Narendran told reporters here after the launch of the company's steel retail store -- 'steeljunction'.

He said the capex for India will largely be deployed on its Kalinganagar plant in Odisha.

"We do believe that things should improve in the second half of the year," Narendran said.

The top Tata Steel official said in order to insulate the steel industry from its cyclical nature, the company is focusing on strengthening the branded consumer business and downstream product portfolio.

"Today the B2C business is about 15 per cent of our revenue. We have set a target that the B2C, services and solutions business should contribute 30 per cent (in the next five years)," he said.

On the South-East Asia business, he said the company has signed an MoU with the Synergy Group, which is "interested in our Thailand assets".

"We should come to a conclusion in the next two-three months," Narendran said.

Following the termination of the definitive agreement with the HBIS Group to divest 70 per cent stake in its South- East Asia business, Tata Steel had executed a Memorandum of Understanding to offload the stake in Tata Steel Thailand to Synergy Metals and Mining Fund.

"We have a lot of subsidiaries in Europe and many of them were created over a period of time. At one point of time, we had 200-300 legal entities and subsidiaries of Tata Steel Europe.

"We have reduced them significantly and are paring another 100-120 this year... In India, it is all about bringing operating subsidiaries together," Narendran said.

Also read: Tata Steel to raise $ 600 million for funding capital expenditure, refinancing debt

Also read: Tata Steel, JSW to focus on water sustainability strategies for future-readiness

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