Tata Steel’s capital allocation in FY26 is expected to remain flat annually at Rs 15,000 crore, the firm’s management said during an earnings call on Tuesday. In FY25, the steelmaker had spent Rs 15, 671 crore on capital expenditure.
A majority of the allocation – 75% — will go towards Tata Steel’s India projects and the rest towards its UK and Netherlands operations.
“Capex for the year is largely focused on raw materials on the Kalinganagar (phased expansion) completion. It also includes the Ludhiana plant, which is 0.8 million tonne, but we hope to push it to one million tonne. There are also some downstream expansions,” TV Narendran, managing director and chief executive, Tata Steel, said. Downstream expansion includes a combi-mill which will convert some of the billets being manufactured at the erstwhile Usha Martin facility into special bars for the automotive industry, he added.
Future projects for the steelmaker in India include the Neelachal Ispat facility for which the public hearing has been conducted and the firm will seek board approval for the expansion of capacity to 9.5 million tonne per annum. This, Narendran said, will be in the next expansion phase, after the Kalinganagar and Ludhiana projects.
Tata Steel also outlined its cost transformation plan for the next few quarters.
“Looking ahead to FY26, our focus continues to be on controllable factors and we are targeting further cost takeouts of almost Rs 11,500 crore (roughly $1.3 billion) across geographies by focusing on controllable cost, and let me outline some of the specifics,” Koushik Chatterjee, chief financial officer, Tata Steel, said.
In FY25, the company said its saved Rs 6, 600 crore in costs using various cost-saving levers.
For FY26, the firm aims to deliver savings to the tune of Rs 4,000 crore by focussing on operational KPIs like employee productivity, and supply chain optimisation coupled with investments in projects with low payback periods.
“There is specific focus on conversion cost and our aim is to optimise conversion cost by about Rs 1,000 to Rs 1,200 per tonne. We have identified a pipeline of low capex projects totalling less than `500 crore that will improve operational cost and be completed in a short span of time,” Chatterjee added.
In the UK, Tata Steel will continue working towards achieving a lean structure by further reducing fixed costs by 29% year-on-year amounting to £220 million. This will be achieved through cost-saving levers like optimising the cost of substrate and the coil mix, upgrading IT infrastructure to reduce corporate overheads and rationalising downstream operations to improve the profitability.
“Our total fixed cost in FY24 was about £995 million, which reduced to about £762 million in FY25, and we target to bring it to around £540 million in the next financial year,” the steelmaker said.
In Netherlands, Tata Steel is targeting savings of around €500 million through volume maximisation, product mix, repair, maintenance, and employee productivity, among others.