Covid helps Tata Steel ramp up financials; highest dividend ever recommended

In spite of a nearly pandemic-stricken business scenario across the globe, Tata Steel has said on Wednesday that it strengthened its financial position as net debt declined by 29,390 crores, taking consolidated net debt to Rs 75,389 crores in FY21.

Tata Steel Chairman N Chandrasekaran said the company’s debt decreased by 28 percent from the start of the year. During the company’s 114th annual general meeting held virtually on 1st July 2021, he addressed shareholders.

Also, the board recommended the highest dividend in the company’s history of Rs 25 per fully paid up equity share and Rs 6.25 per partly paid up equity share.

In addition to the first and final call on the partly paid up equity shares, Tata Steel also received approximately Rs 3,500 crore in the form of first and final call money during the year, Chandrasekaran stated.

Towards simplifying the business, Tata Steel said it rationalized around 100 legal entities and advanced the merger of Tata Steel BSL with Tata Steel in the last 24 months.

“We have also invested in the areas of digital analytics and IT to make our business structure more competitive and agile,” said Chandrasekaran.

In the Europe business, the process to separate Tata Steel Netherlands and Tata Steel UK is currently underway, and the transformation programme is geared towards building a profitable, resilient and sustainable business in the future, he said.

Despite production losses due to pandemic and the national lockdown in the first two quarters of FY21, the domestic steel industry recovered gradually in the next two quarters, helped by a strong revival in steel demand at home and increases in manufacturing and infrastructure development. This helped the company record its highest EBITDA ever in FY21 of Rs 30,892 crore, an increase of 71 percent over FY20.

The company’s management demonstrated a strong focus on generating free cash flows through disciplined capital allocation and tight working capital management during the year, it said.

Disclaimer – The article is picked from news authored by Aditi Divekar at Business Standard.