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On a path to Revival

Tata Steel BSL has seen its fortunes turn around after the acquisition, thus climbing the most positions in BT 500.
twitter-logo Nevin John        Print Edition: December 1, 2019
On a path to Revival

The uncertainty in Bhushan Steel started in 2014, when it had a hard time convincing its lenders that it can pay off its Rs 40,000-crore debt when Managing Director and Promoter Neeraj Singhal was arrested in a bribery case. The company had high credit ratings but that changed after the arrest. The downgrade caught its lenders unawares. In May 2018, Bamnipal Steel, a wholly owned subsidiary of Tata Steel, acquired Bhushan Steel by paying Rs 35,200 crore in cash to its creditors.

Things started looking up. The total income of Tata Steel BSL (new name of Bhushan Steel) increased 22.9 per cent to Rs21,024 crore in 2018/19. The loss before exceptional items reduced to Rs 1,264 crore from Rs 5,791 crore. Including the exceptional gains, the company posted a net profit of Rs 1,713 crore vis-a-vis a loss of Rs 24,813 crore in the previous year.

The management change and the revival plan have helped the company regain investor confidence and this led to its rank in BT 500 climbing to 423 from 620. The average market value improved to Rs 3,210 crore in the October 2018-September 2019 period from Rs1,998 crore in the previous year.

Since the acquisition by Tata Steel, the company has adopted a three-tier integration strategy to stabilise the plant, focus on capacity and cash flows and initiate strategic capital investments for sustainable returns.

Last year, the company also launched an accelerated performance improvement plan to achieve benchmark levels in operations and capabilities. It grew its presence in the core automotive segment by enhancing customer base and initiating commercial supplies to new auto original equipment manufacturers (OEMs). It developed steel for outer panel applications of automobiles from its Angul plant. The company also developed value-added and high-strength steels, thereby expanding its product portfolio, company executives said.

Tata Steel BSL continued as a leading supplier for appliance makers last year, growing its market share to 50 per cent. For the first time, the company has set up an organised distributor network with distributors for each product category. Segment specific brands like Tata Steelium, Tata Shaktee and Tata Kosh were launched, which helped create value.

TSBSL has maintained its leadership position in precision tubes for the automotive segment with 25 per cent share of the business. The company has also been focusing on the oil and gas segment and water pipeline projects in domestic and exports market.

This financial year, the company is focusing on downstream exports by increasing its presence in Europe, Africa, South East Asia and Latin America, and creating a market for high-end hot rolled coil exports like structural steel.

@nevinjl

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