Tata Steel lifts profits, but UK pain lingers amid cheap imports

The steelmaker may also fall short of its target of increasing domestic steel production capacity to 40 million tonnes per annum (mtpa) by 2030 as it plans to accelerate growth based on industry profitability and margins, TV Narendran, managing director and chief executive officer of Tata Steel Ltd, said in an interview with Mint.

“India has improved because the Kalinganagar expansion came online. More production in Kalinganagar means more cost efficiency because it is one of our most cost-effective facilities,” said Narendran. Another important reason for the improvement of the company’s financial situation was the cost reduction program it launched at the beginning of the financial year. He said that the Dutch enterprise, which had a difficult 18 months due to the relining of the blast furnace and even reported a loss for the first time, has now recovered and produced nearly 7 million tons.

Tata Steel aims to cut costs by up to 200% ₹11,500 crore in this financial year and this figure has already been achieved ₹5,450 crore savings in the first half of the financial year (first half of FY26).

However, Narendran stated that the outlook for UK operations remained weak due to increasing steel imports. The company, which has invested £1.25bn to restructure its European business, is unlikely to become profitable unless the UK government imposes stronger import restrictions.

Koushik Chatterjee, managing director and chief financial officer of Tata Steel Ltd, said that in the absence of any policy action from the UK government, the company would have to resort to “further restructuring” of its operations “to make it more sustainable”, adding that it would not choose to take such measures.

Chatterjee also emphasized that there was no other scope to cut costs in the UK business and hence their focus was on policy.

“If nothing happens, if China continues to export 10 million tonnes a month and steel prices remain the same and the UK government takes no action, then it will obviously be very difficult for us to become EBITDA positive in the UK,” said Narendran.

Tata Steel is calling on the UK government to take measures similar to those in the EU, which would reduce import quotas for each country and increase duties on volumes exceeding these limits.

Tata Steel shares down 1.15% ₹It compared with the benchmark Nifty50, which ended stable at 176.55 per capita on the National Stock Exchange on Thursday.

Road map to 40 mtpa

At the end of FY25, Tata Steel’s domestic capacity stood at just 26.6 mtp per annum.

“The company will not complete 40 million tons by 2030, but it will have projects to meet this volume by 2030,” said Narendran.

Between Jamshedpur at 11 mtp per annum, Kalinganagar expandable to 16 mtp, Meramandali at 10 mtp and Neelachal Ispat Nigam Ltd at 10 mtp, the company has land capacity to scale up to about 46 mtp, said Narendran.

Tata Steel’s immediate focus is to expand Kalinganagar to full 8 mtpa capacity by the end of 2025 and expand Neelachal Ispat from 1 mtpa to 5 mtpa, pending regulatory clearances. Once both expansion projects are completed, Tata Steel will reach an annual capacity of 31-32 mt. Moreover, by 2030, the company expects Bhushan Steel’s capacity to increase from 5 mtp to 6.5 mtp per annum, Kalinganagar’s capacity to increase from 8 mtp to 13 mtp and Tata Steel’s total capacity to increase to around 38-39 mtp.

In addition, Tata Steel has started construction of a 0.75 million tonne electric arc furnace (EAF) in Ludhiana, which will be commissioned by 2027. Subsequently, Tata Steel plans to accelerate two more EAF projects depending on the operational success of the Ludhiana plant. In addition to the Ludhiana project, Narendran expects another EAF project to be completed by 2030.

2nd quarter performance

Tata Steel, India’s second largest steelmaker by capacity, reported stronger-than-expected net profit for the September quarter. Profits more than tripled from a year ago ₹3,101.75 crore due to increased deliveries and cost control measures in India and Netherlands.

The figure exceeded Bloomberg’s forecast ₹2,739.58 crore, according to a survey of 16 analysts. The steelmaker’s profit increased by 49% sequentially.

Narendran listed many reasons for the strong results, including strong Indian operations, low coking coal prices in the Netherlands and cost-cutting measures. “Unfortunately, the markets did not help us at all across geographies,” he said.

While its UK operations are still in the red, they have halved their losses compared to last year despite lower steel prices. Narendran added that the UK business has implemented around £350 million in fixed cost reductions as well as operational efficiency measures.

Tata Steel’s consolidated income from operations increased by 9% and 10% sequentially compared to the same quarter of the previous year. ₹58,689 crore in the July-September quarter.

The steelmaker’s consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) increased by 45% ₹8,897 crore compared to the same quarter last year.

For its overseas operations, the steelmaker’s Dutch operations reported an EBITDA of 92 million euros, compared to 64 million euros in the first quarter. However, UK EBITDA losses widened to £66 million compared to losses of £41 million in 1Q26 due to reduced demand.

Appearance

Tata Steel expects realizations in India to fall by approx. ₹1,500 per tonne in the third quarter, following a similar decline in the previous quarter. The steelmaker also expects coking coal consumption costs to increase by about $6 per ton, Narendran said in a post-earnings call with analysts on Thursday.

India will see “some margin compression” but domestic operations will increase in terms of volume, with half a million tonnes more in the third quarter due to the increase in Kalinganagar, he said.

European operations may also report weaker operations. The Netherlands may see margins soften somewhat, but lower input and energy costs may provide some cushion.

“Maybe things shouldn’t get worse” in the UK, said Narendran, adding that the company was “trying to see how it will improve, the second quarter was worse than the first quarter” but that the third quarter was not necessarily worse than the second quarter.

“The outlook for the third quarter remains weak, with steel spreads in India likely to remain under pressure due to softer prices and rising coking coal costs. In the UK, reaching breakeven is unlikely this fiscal without government policy support,” said Aditya Welekar, senior research analyst at Axis Securities.