Moneycontrol PRO
Check Credit Score
Check Credit Score
HomeNewsBusinessCompanies

Tata Steel UK cash burn at $150 million in H2 FY22-23

Of the total planned capex of Rs 16,000 crore in FY23-24, Tata Steel will spend up to Rs 800 crore on maintaining UK assets.

May 08, 2023 / 05:06 PM IST
Liquid steel production at Tata Steel’s loss-making Port Talbot Steel Works, Wales, stood at 3.5 million tonnes in FY22.

Liquid steel production at Tata Steel’s loss-making Port Talbot Steel Works, Wales, stood at 3.5 million tonnes in FY22.

 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Any closure of upstream assets in the UK on reaching end-of-life will cost Tata Steel more than £100 million, top executives from the steel major told analysts last week. The company further said that the UK operations reported a cash burn of $150 million in the second half of FY22-23, higher than what they had guided earlier.

Tata Steel has been in discussions with the UK government, seeking financial support for a green transition of its UK assets. So far, it said, the talks have remained inconclusive.

In an interview with Moneycontrol, TV Narendran, Chief Executive Officer and Managing Director, Tata Steel, said that in the worst-case scenario, if the UK government did not help finance a green transition, different UK (upstream) assets would be closed as they reached end-of-life.

Also Read: Green steel standoff lingers, Tata Steel to decide on UK assets in 2 years, says Narendran

“The  plan  under discussion with the UK government is for a support of more than £1 billion, which includes transition from a blast furnace to an electric arc furnace. In case of closure, the cost is estimated to be in hundreds of millions of Pounds,” analysts with Centrum wrote in a note on May 3.

In the interview last week, Narendran had indicated that some of the assets would reach end-of-life in two years.

Further, Tata Steel also informed that the UK business had incurred a cash burn of $150 million, analysts said. "Tata Steel, Netherlands, has £600 million in cash, while the UK business burnt $150 million in the last six months,” analysts with Anand Rathi noted in a May 4 report on Tata Steel.

ALSO READ: Tata Steel Q4 profit takes 84% dent but outshines estimates: Here's what brokerages say

In the quarter ended September 2022, Koushik Chatterjee, Executive Director and Chief Financial Officer, Tata Steel, had said, “The assets in the UK are older than in the Netherlands, and in fact, older than the rest of Tata Steel’s portfolio. It will become maintenance heavy in course of time.”

In FY23-24, Tata Steel plans to spend Rs 16,000 crore in capex, of which Rs 700-800 crore would be towards maintaining the UK assets, the company informed analysts.

Amritha Pillay
Amritha Pillay
first published: May 8, 2023 05:06 pm

Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!

Advisory Alert: It has come to our attention that certain individuals are representing themselves as affiliates of Moneycontrol and soliciting funds on the false promise of assured returns on their investments. We wish to reiterate that Moneycontrol does not solicit funds from investors and neither does it promise any assured returns. In case you are approached by anyone making such claims, please write to us at grievanceofficer@nw18.com or call on 02268882347