Results Presentation Financial quarter ended June 30, 2020 August 13, 2020 1
Statements in this presentation describing the Company’s performance may Safe harbor statement be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results may differ materially from those directly or indirectly expressed, inferred or implied. Important factors that could make a difference to the Company’s operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in or due to the environment, Government regulations, laws, statutes, judicial pronouncements and/or other incidental factors. 2
Committed towards excellence in Safety, Health & Sustainability Safety Health Sustainability ▪ Trained >25,000 employees on ▪ Conducted COVID health screening ▪ Signed Memorandum of Understanding Standard Operating Guidelines for covering 54,500 employees and with Shell for identifying opportunities carrying out operations following contract workforce in CO 2 abatement COVID-19 outbreak ▪ Created 'PODs', a regularly ▪ Air quality in Jamshedpur and ▪ Launched safety campaign on ‘Slip - sanitised modular workplace Kalinganagar improved from moderate trip- fall’; taken various initiatives to arrangement of maximum 10 self- to satisfactory zone as per Air Quality improve awareness and behaviour of sufficient team members, to ensure Index employees and contract workforce adequate social distancing LTIFR reduction by ~26% 0.95 0.78 0.70 0.69 0.68 0.60 0.58 0.56 0.47 0.46 0.44 0.39 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 1Q21 LTIFR: Lost Time Injury Frequency Rate per million man hours worked, for Tata Steel Group 3
#Thought for Food Supporting our ▪ >27 Lacs meals served communities during ▪ 48,000 ration + hygiene packets distributed COVID-19 pandemic #Stitch in Time ▪ >1 Lac masks produced ▪ >Rs.7 Lacs income disbursed amongst 191 households who were engaged in mask making #Cash for Work ▪ >Rs.23 Lac income disbursed through creation of kitchen Spent >Rs.1,000 crores on CSR gardens, wall-writings, paintings, paper bags, musical (by TSL Standalone over last 5 years) instruments and woodcrafts 315 ▪ About 2,900 households supported 232 204 194 193 #From the Farm 84 ▪ 203 farmers supported throughout value chain including online delivery platforms FY16 FY17 FY18 FY19 FY20 1QFY21 ▪ >Rs.7 Lacs income disbursed #Digital Bridges We engaged with about ▪ >26,000 people reached out through Mobile Medical Units 8,80,000 lives through our and Tele-consultations CSR program in 1QFY21 ▪ 575 Sahiyyas and Anganwadi workers reached out 4
Global macro environment China – major activity indicators Steel Production, demand and Chinese ▪ Economic activity is gradually recovering, supported by (%YoY change) net exports (mn tons) relaxation in lockdowns and economic stimulus China net exports 100 9 World ex-China Steel Production 30% China Steel Production China Apperant Steel demand ▪ World-ex China adjusted steel production amid weak 0% demand, however, China Steel production increased 80 6 and has edged above one billion tons on annualized -30% basis Rebar Shipment 60 3 Cement Shipment Auto Sales -60% Property Sales Electricity Production ▪ China’s major activity indicators suggest a V -shape Subway Passenger Volume 40 0 -90% recovery; robust Chinese steel demand, normalizing Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 steel inventories and declining net steel exports from China have led to an improvement in Asian steel prices Iron Ore prices and spot HRC Global HRC prices ($/t) spreads ($/t) ▪ Iron ore prices have increased sharply with supply side Iron Ore-62% Fe, China CFR (RHS) Korea export FOB China-Domestic 500 150 China -Spot spread China-Exports FOB Germany Domestic 725 disruptions and strong demand from China; regional EU Spreads gross spot spreads decreased to unsustainable level in 400 125 650 May- Jun’20 before improving marginally in Jul’20 575 300 100 500 ▪ Economic recovery remains exposed to further COVID- 200 75 19 outbreaks and rising geopolitical tensions 425 100 50 350 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Sources: World Steel Association, IMF, Bloomberg, Steelmint, JP Morgan, Morgan Stanley and Tata Steel Note: China HRC spot spreads = China HRC exports FOB – (1.65x Iron Ore Fe 62% China CFR+ 0.7x Premium Hard Coking Coal China CFR); EU HRC spot spreads = 1t HRC (Germany) - 1.6t iron ore 5 (fines 65%, China spot, R’dam) - 0.7t premium hard coking coal (Australia spot, R’dam) - 0.1t scrap (HMS, R’dam)
Business environment in India and Europe India: India key sectors growth* India steel volumes (mn tons) ▪ Apparent steel consumption declined by 55%QoQ and 56%YoY to 11.14 mn tons in 1QFY21 as economic activities Exports (RHS) Crude Steel Production Capital Goods Finished steel demand Infrastructure/ construction goods 12 2.0 declined sharply in Apr- May’20 amid complete nationwide Automotive Total unemployment rate (RHS) lockdown 150 30 9 1.5 ▪ Recovery begun from Jun’20; apparent steel demand 100 20 improved in Jun‘20 and July ’20 to 67% and 75% of FY20 6 1.0 average monthly demand 50 10 3 0.5 ▪ Steel prices are improving since Jun’20 on demand recovery and surging regional steel prices 0 0 0 0.0 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20 May-20 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20 July-20 Europe: EU key steel consuming sectors ▪ COVID-19 has further impacted the already struggling steel (monthly, YoY % change) EU market supply demand with automotive sector impacted the hardest; there Construction, Output Imports (mn tons) EU deliveries (mn tons) are signs of slow recovery Mechanical engineering, Output Imports share (%, RHS) Production of cars (units) ▪ Despite fall in imports, share of steel imports to total 16 30% 20% 0% consumption in EU remains elevated 12 20% -20% ▪ Spot spreads fell sharply as steel prices decreased in -40% 1QFY21 amid weak demand, decrease in coking coal price -60% 8 10% was more than offset by rising Iron ore prices -80% -100% 4 0% May-20 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20 Source: Bloomberg, IMF, SIAM, Joint plant committee, MOSPI, CMIE, World Steel Association, Eurofer, Eurostat and Tata Steel *Figures of Industrial Production for Capital Goods and Infrastructure/Construction are rebased to Apr'18=100 using FY12 index based sector weights; number of units produced as per SIAM is rebased 6 to Apr'18=100
Recalibration amid the challenging environment Long term funds raised Managing risks at physical assets to shore up liquidity and across the supply chain Aggressive liquidity management Optimized plant operations; curtailed aimed at cash neutral operations utilization levels in April before ramping up from May Agility in the face of adversity Ramped up mining operations Engaged with UK and EU to reduce iron ore buy government to seek support Squeeze on spend and Exports increased to counter capex to conserve cash closure of Indian markets 7
Key performance highlights & Capacity utilization in India 01 ramped up to normalized levels updates towards end of June Overall India sales volumes in 02 June ‘20 at 115% of FY20 average monthly deliveries 03 Free cashflow generation in the face of COVID-19 disruption Maturity profile extended by 04 raising long term debt of Rs.5,935 crores Net debt reduced crores as a contingency buffer 05 despite unprecedented Liquidity increased to Rs.20,144 disruption 8
Consolidated (All figures are in Rs. Crores unless stated otherwise) 1QFY21 4QFY20 1QFY20 financial Production (mn tons) 1 5.14 7.37 7.15 performance Deliveries (mn tons) 4.93 6.50 6.34 Total revenue from operations 24,289 33,770 35,947 Raw material cost 2 9,614 13,296 16,127 Change in inventories 786 (1,540) (2,365) EBITDA 597 4,669 5,515 Adjusted EBITDA 3 1,038 4,869 5,530 Adjusted EBITDA per ton (Rs./t) 2,105 7,491 8,725 Pre exceptional PBT from continuing operations (3,396) 1,906 1,803 Exceptional items 58 (3,406) 16 Tax expenses 1,272 (263) 1,124 PAT from Continuing Operations (4,609) (1,236) 695 Note: Consolidated numbers doesn’t include NatSteel Holdings and Tata Steel Thailand as these have been classified as “Discon tin ued operations”; 1. Production Numbers: Tata Steel Standalone, Tata Steel BSL & Tata Steel Long Products - Crude Steel Production, Europe - Liquid Steel Production; 2. Raw material cost includes raw material consumed, and purchases of finished and semi-finished products, 3. Adjusted for fair value changes on 9 account of exchange rate movement on investments in T Steel Holdings and revaluation gain/loss on external/ internal company debts/ receivables at TS Global Holdings
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