tata steel ltd Management discussions


Management Discussion and Analysis 2022-23

I. Overview

The objective of this report is to convey the Managements perspective on the external environment and steel industry, as well as strategy, operating and financial performance, material developments in human resources and industrial relations, risks and opportunities and internal control systems and their adequacy in the Company during FY2022-23. This should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in this Integrated Report and Annual Accounts 2022-23. The Companys financial statements have been prepared in accordance with Indian Accounting Standards (IndAS)complyingwiththerequirementsoftheCompanies

Act, 2013, as amended and regulations issued by the Securities and Exchange Board of India (SEBI) from time to time.

II. External Environment

1.Global Economy

Global GDP growth is estimated to fall from 3.4% in 2022 to 2.8% in 2023. The continuing Russia-Ukraine war along with central banks hiking rates to tame in ation continues to weigh on economic activity. Growth in 2022 was dampened due to rapid spread of COVID-19 variants in China and the ongoing war in Ukraine. The concerted sanctions on Russia, which supplies around 10% of the worlds energy, lead to dampening growth and further straining of supply chain. The war worsens the persistent inflation across developed economies. However, the recent re-opening may lead to faster than expected recovery in 2023.

Growth rate in 2023 in USA is expected to be 1.6%, while the eurozone is expected to remain strained at 0.8%. The energy shock, a result of the war in Ukraine, continues to impact the economic activity in Europe. Chinas economy is set to rebound to 5.2% as mobility and industrial activity pick up after lifting of pandemic restrictions. The contraction in real estate remains a major headwind. Long-term headwinds to growth include a shrinking population and slowing productivity growth.

Economic Outlook

The factors that drove inflation in 2022 are already reversing. These include increase in commodity prices, expansive scal and monetary policy, and supply chain disruptions. Global in ation is expected to fall from 8.7% in 2022 to 7% in 2023 on the back of lower commodity prices. In ation has already peaked in the US and Europe in early 2023. It is also declining in other major economies including Japan, China and India.

In the US, economic growth is expected to be slower in 2023 given the tightening monetary and scal policy. Contrary to late 2022 estimates, US will avoid a recession due to declining energy prices, strong employment growth, and easing of supply chain stress.

Threat of recession continuous to loom over Europe as wages and consumer spending has fallen significantly. Elevated natural gas prices are fuelling inflation and driving down purchasing power. The tightening of monetary policy by ECB and Bank of England along with energy shock resulting from the Russia-Ukraine war will play a key impact on the growth potential.

2.Indian Economy

GDP growth rate in 2023 is expected to be 5.9%, lower than the 2022 growth of 6.8% due to subdued external demand and tightening monetary policy. However, India will remain the fastest growing major economy.

Brent oil prices are expected to remain rangebound in 2023, given the continuing war in Ukraine and sanctions imposed in response by the USA and European Union. India meets nearly 80% of its oil needs through imports. High oil prices will also have a trickledown e ect on the prices paid by consumers for goods and services. Persistent in ation resulted in RBI to increase the repo rate by 250 basis points throughout FY2022-23. Further rate hikes are expected in the coming year, despite no rate hike in the April Monetary Policy Committee meeting. Capital investment of close to 3.3% of GDP is expected to crowd-in private investment, strengthen job creation and demand, and raise Indias overall growth potential. Focus is expected in the energy sector, with significant capital investments towards energy transition and green hydrogen mission.

Overall, the key steel consuming sectors are expected to perform well in FY2023-24 supported by a rise in infrastructure spend by the Government and gradually improving semiconductor supply. High CAPEX allocation in key steel consuming sectors such as railways, national highways and housing is expected to drive steel consumption.

III. Steel Industry and Developments

1.Global Steel Industry

The recovery momentum of global economy after the pandemic has been a ected by persisting in ation, US monetary tightening, Chinas economic deceleration and continued supply disruptions due to Russia-Ukraine war. High energy prices, rising interest rates, and falling con dence have limited recovery of the steel demand after a dip in 2022. However, positive factors like Chinas re-opening, Europes resilience during the energy crisis and preliminary easing in supply chain bottleneck will lead to a Y-o-Y rise in global steel demand by ~2.3% (~1,822 MnT) in 2023.

The Chinese steel demand is expected to grow by ~2% in 2023 after 3.5% decline in 2022. The growth may be attributed to base e ect and slight uptick in real estate after decline in 2022 due COVID-19 lockdowns, slump in the property market and continued focus on sustainability. The European steel demand is expected to fall further by 0.4% in 2023 after ~8% decline in 2022. Demand in the USA is expected to grow moderately by ~1% in 2023 backed by relief in infrastructure segment with 2021 Infrastructure Law and In ation Reduction Act.

The year witnessed very high volatility in raw material, especially coking coal on account of the on-going geopolitical concerns and supply chain bottlenecks impacting steel price across geographies.

2.Demand Outlook

Demand in the US is expected to grow moderately by 1.3% in 2023 by relief in infrastructure segment aided by recent legislations like 2021 Infrastructure Law and In ation Reduction Act.

Recovery in Japan and South Korea may gain pace with strengthening construction segment and easing supply chain and exports.

Global steel demand is expected to grow by 1.7% reaching 1,854 MnT driven by growth in Asia, Chinas re-opening, diversifying supply chains and Europes resilience. Demand in Europe is expected to see a 5.6% rebound in 2024 after 4 consecutive years of Y-o-Y contraction in the steel demand.

Sustained in ation remains a downside risk, potentially keeping interest rates high. Exports are expected to decline further with rise in protectionism and slowdown in global demand. As Chinas population declines and moves to consumption-driven growth, its contribution to global steel demand growth will lessen. Outlook for India remains positive led by strong urban consumption and infrastructure spending.

3.Indian Steel Industry

India remains the ‘bright spot for global steel demand. After growth of 8.2% in 2022, demand is expected to show healthy growth of 7.3% in 2023 backed by consumption led demand. Having managed in ation well, the Indian economy is on a healthy growth track, with a rising share of investment in GDP, appropriate budget allocations and expenditure by the Government in the infrastructure segment. India also faced supply disruptions due to raw material constraints and volatility of prices.

4.Outlook for Indian Steel Industry

Indian steel demand is expected to be robust and growing by 6.2% in FY2023-24 supported by strong GDP growth forecast, private consumption and Government expenditure. Indias capital goods sector is also expected to benefit from the momentum in infrastructure and investment in renewable energy. Automotive and consumer durables are expected to maintain healthy growth driven by sustained growth in private consumption.

Integrated Steel Players will continue to add capacity in FY2023-24, and utilisation levels are expected to remain healthy at ~80%. Net export position is expected to strengthen with removal of export duty.

5.Global Raw Material Market (Iron Ore and metallurgical coal)

The steel raw materials market in FY2022-23 continued to see volatility particularly in coal markets amid intermittent weather disruptions in Eastern Australia while trade flows drastically shifted following the Russian-Ukraine war. i) Demand & Supply

Total global crude steel production for 2022 stood at 1.88 billion tons, falling 4.2% Y-o-Y from a record high in 2021 as tighter scal and monetary policy impacted global steel demand.

Chinese steel production mainly led the decrease as steel output fell for a second straight year, down 21 MT or ~2% to 1.01Bt. European steel mills had also been largely impacted by the shrinkage in steel demand, with EU27 steel production falling 16.5 MT or 10.4% Y-o-Y to 136 MT. Chinas iron ore imports for 2022 fell 1.5% Y-o-Y to 1.11Bt, in line with the lower overall steel production. Chinas coking coal imports in contrast rose 16.6% Y-o-Y to 63.8 MT, following improved logistics from Mongolia after COVID-19 restrictions eased, while excess Russian coals were also being diverted to China at competitive prices.

China had also continued an aggressive coal production regime through 2022 in e ort to reduce import reliance. Chinese raw coal production hit a record high in December 2022 of 403 MT, with volumes for the full year estimated rising 11% from the year prior. China had also removed its unoffcial ban for Australian coals at the end of 2022 with trade ow expected to pick up in 2023, subject to cost competitiveness for Chinese end-users.

Meanwhile, Australian coking coal exports had fallen for its third consecutive year down by 4.5% Y-o-Y to 158.6 MT. A third consecutive La Nina year had also plagued eastern Australian miners with heavy rainfall and occasional ooding at the mines and ports. Queensland weather stations had reported approximately 40-45% higher rainfall for 2022 as compared to its 5-year trailing average. ii. Prices

Seaborne Iron ore prices in 2022 had corrected from its record highs in 2021 amid a slump in Chinese steel demand and prices. 62% Fe CFR China prices ranged between $80.15/t and $162.75/t in 2022 compared to $87.20/t and $233.10/t in 2021. Average iron ore prices stood at ~$120.10/t for the year, a 25% decrease from ~$159.5/t for 2021.

Iron ore prices hit a peak in March 2022 before embarking on a sharp downtrend due to a decline in steel prices and margins. Key property metrics in China like new home sales and new home starts averaged 25%-40% lower Y-o-Y through 2022. Steel margins reported by Chinese steel mills were largely negative for the second half of the year which also weighed on iron ore prices.

On the supply front, total shipments from Australia and Brazil were largely at on the year averaging 24.2 MT/ week, compared to 24.5 MT/week in 2021.

Into 2023, Iron ore prices have largely been rangebound for the January-March 2023 quarter, with some market participants citing uncertainty towards Chinas downstream recovery for steel. The Chinese government has also been in discussions of further lowering crude steel production by 2.5% this year which would further impact seaborne iron ore demand. Shipments from Australia have also been benefiting from a drier than seasonal January-March 2023 quarter, with export volumes estimated 6% higher Y-o-Y.

Platts Fe62%

CFR China Spot Pellet Premium

Seaborne Coking coal prices saw sharp volatility through the year due to frequent weather disruptions alongside the impact of the Russian-Ukraine war. PHCC FOB Australian prices ranged between $188/t and $670.5/t in 2022, compared to $102/t and $408.5/t in 2021. Average coking coal prices stood at $363.7/t for the year up from $313.4/t the year prior.

FOB Australian prices were driven to record highs in the first half of the year, as an anticipated ban on Russian coal exports led to panic buying across Europe. While prices cooled off in the later half of the year, prices were still elevated on a historical basis as last years La Nina weather conditions impacted Australian miners ability to meet production guidance for the year.

Platts PLV CC (FOB Aus)

Into 2023, coking coal prices have traded in a tighter range albeit still volatility surrounding weather developments particularly in Eastern Australia. The Bureau of Meteorology have officially announced an end to La Nina weather conditions in March which could lessen the risk of supply disruptions for the rest of the year. Meanwhile, the expected re-emergence of China as a spot buyer of Australian coking coal this year may leave the market more tightly balanced

Initiatives by Tata Steel

The Company took several key initiatives in its raw material procurement. Strategic Initiatives during FY2022-23 are:

•New products trials:

In order to ensure long term supply security and stable supply, new coal trials were undertaken by the Company, through a structured trial process, which helped the Company to diversify the source and supplier base.

The Company also engaged in development of LD Sludge based pellets by utilising hazardous waste (LD Sludge), which is an example of first in the industry.

•Blend optimisation to take advantage of market opportunities: Considering wide spreads in prices across grades of raw material (RB1 vs RB2 grade DRI coal, mid-phos vs low phos nut-coke, etc.) value creation was achieved by optimising blends through cross functional collaboration.

•MoU signed with strategic suppliers for decarbonisation projects: Memorandum of Understanding was signed with one of the leading coal suppliers for exploring and developing use of biomass/biochar in steelmaking process, developing carbon capture utilisation and storage technologies, as well as using biofuels for shipment of raw materials.

IV. Tata Steel Group Operations

Major Highlights

During the year under review, the consolidated crude steel production for Tata Steel Group (‘TSG) was 30.65 MnT as against 31.03 MnT for FY2021-22, a marginal decline of 1%. The production increased at Tata Steel Standalone to 18.97 MnT which was higher by 3% (FY2021-22: 18.38 MnT). At the Tata Steel European Operations, Tata Steel Nederland

(‘TSN) produced 6.32 MnT, lower by 4% (FY2021-22: 6.61 MnT) mainly due to weakening of market during the 2nd half of FY2022-23. Production at Tata Steel UK (‘TSUK) at 3.02 MnT was lower by 14% against previous year (FY2021-22: 3.50 MnT) as TSUK undertook a significant maintenance programme focused on its steelmaking assets in Port Talbot in order to improve operational stability. Tata Steel Long Products produced 0.71 MnT (FY2021-22: 0.68 MnT), moreover, with the completion of NINL acquisition, the production further increased by 0.20 MnT during the year. Production at South-East Asia (‘SEA) was 1.43 MnT (FY2021-22: 1.86 MnT) which was lower due to disposal of Singapore operations of NatSteel Holdings Pte. Ltd. (‘NSH) during FY2021-22. The consolidated steel deliveries of TSG was at 28.79 MnT in FY2022-23 as against 29.52 MnT in FY2021-22, a marginal decrease of 2% primarily at TSE due to weakening of market and at SEA.

The turnover of TSG was marginally lower over FY2021-22 by 606 crore on account of decline in steel realisations across geographies except European operations attributable to decrease in demand and implementation of export duty on steel in India during the year, along with lower steel deliveries by 0.73 MnT.

The EBITDA was lower over FY2021-22 by 31,132 crore (49%), primarily due to increase in input cost mainly in coking coal along with lower steel realisations in India, partly offset by favorable foreign exchange rate movement at India.

TSG reported a consolidated Profit after Tax of 8,075 crore which was lower over FY2021-22 in line with decline in EBITDA, along with higher net nance charges by 642 crore which is primarily due to additional loans taken during the year in India and higher tax charge by 1,682 crore mainly due to higher non cash deferred tax charge at TSUK attributable to insurance buy-in of pension liabilities which was offset by lower tax charge at India on account of lower profitability. Exceptional gain of 113 crore in FY2022-23 against a charge of 134 crore in FY2021-22 contributed to the profit during the year.

1.Tata Steel Limited (Standalone)

The turnover and profit/(loss) figures of Tata Steel Limited are given below:

FY 23

FY 22

Turnover 1,29,007 1,29,021
EBITDA 28,175 51,456
Profit before tax (PBT), before
21,801 44,326
exceptional
Profit before tax (PBT) 21,022 44,091
Profit after tax (PAT), before exceptional 16,274 33,247
Profit after tax (PAT) 15,495 33,011

a) Operations

FY 23

FY 22

Change (%)

Hot Metal 19.25 18.90 2
Crude Steel 18.97 18.38 3
Saleable Steel 18.19 17.91 2
Sales 18.22 17.62 3

The saleable steel production and sales trend over the years is as follows:

Production and Sales of Steel Division (k tonnes)

The combined saleable steel production of FY2022-23 stood at 18.19 MnT which was higher than that of FY2021-22 (17.91 MnT) by 2% and the combined steel sales of FY2022-23 stood at 18.22 MnT, higher by 3% over FY2021-22 (17.62 MnT). i) Tata Steel Jamshedpur

Tata Steel Jamshedpur (‘TSJ) produced crude steel of 10.64 MnT in FY2022-23 as against 10.25 MnT in FY2021-22 which was higher by ~3.80%. The hot metal production of FY2022-23 stood at 11.05 MnT (10.83 MnT in FY2021-22) higher by ~2%. Blast Furnaces operated at a fuel rate of 526 kg/thm in FY2022-23 as against 535 kg/thm in FY2021-22 which was better by 9 kg/thm. For improving fuel rate, idea of injection of Coal-Colemanite was implemented in TSJ Blast Furnaces. In steelmaking, scrap consumption increased to 8.5% in FY2022-23 from 8.1% in FY2021-22 thereby achieving lower COFF emission. During FY2022-23, there has been significant improvement in overall refractory consumption, specific power consumption and specific energy consumption for TSJ. The Company has continuous operational improvement programmes through Shikhar25 which is a focused EBITDA improvement programme which works across departments of Tata Steel to improve operational e ciencies, lower costs, optimise product mix, reduce, and recycle waste and energy e ciency. ii) Tata Steel Kalinganagar

Phase-1 (3 MTPA) of Tata Steel Kalinganagar (‘TSK) had started commercial production in June 2016 and attained the production levels at its rated capacity in less than 2 years. FY2022-23 has been TSKs best year in terms of production volumes and operating KPIs, with almost all operating units expected to achieve their best-ever annual production figures.

The production volumes achieved by various plants are: Coke Plant – 1.56 MnT (FY2021-22: 1.55 MnT) of Gross Coke, Blast Furnace – 3.59 MnT (FY2021-22: 3.47 MnT) of hot metal, Steel Melting Shop – 3.37 MnT (FY2021-22: 3.24 MnT) of crude steel, and Hot Strip Mill – 3.57 MnT (FY2021-22: 3.24 MnT) of Hot Rolled Coils. Nearly 340 KT of slabs from Tata Steel Meramandali have been rolled at TSK mill during FY2022-23. The product mix in FY2022-23 comprised Medium and Low Carbon, Interstitial-free (IF), peritectic and micro-alloy grades, which served different market segments with a special focus on High Tensile for Auto, API for Oil and Gas Sector, Structural grades for Solar, Crash Barrier, Pre-Engineered Building, Lifting and Excavation Segment. Trials for casting and rolling of 1.2% Si and 2.4% Si Electrical steel were successfully carried out.

3.2% Si Electrical steel was successfully casted. This grade will help the Company to develop expertise to foray into the fast-growing Electric Vehicle (EV) industry.

In FY2022-23, TSK undertook approximately 72,000 new plantations, contributing to the greenbelt coverage of 414 hectares (33% of overall area) complying with the State Governments statutory requirement. TSK achieved its best-ever figures in Blast Furnace fuel rate (530 kg/thm), COFF emission intensity (2.32 tCOFF/tcs) and specific water consumption (3.31 m3/tcs). Additionally, TSK focused on the execution of the Zero E uent Discharge (ZED) project throughout the year and will achieve ZED from April 2024. TSK broke ground for a 10 TPD syngas pilot plant designed to generate syngas from bio-waste, which can be used as an alternative reductant in blast furnace. This project will enable TSK to gain domain expertise in means for carbon footprint reduction.

TSKs support played a crucial role in the successful and speedy revival of the NINL plant, which stands as a significant achievement for Tata Steel.

TSK is currently in the second phase of expansion, which aims to increase production capacity to 8 MnTPA. In February 2023, the Cold Rolling Mill PLTCM successfully rolled its first Full Hard Cold Rolled (FHCR) coil, while the

Pellet plant achieved its first phase pellet roll out in March 2023. Both units will focus on ramping up production in the coming financial year. The Pellet plant will provide support for the agglomerate mix used in blast furnace operations, while CRM will cater to the production of high-strength cold-rolled products to meet the requirements of our auto customers. The commissioning of the Continuous Annealing Line (CAL) and Continuous Galvanising Line (CGL) of CRM is expected to take place in H2 of FY2023-24 and FY2024-25, respectively. The Engineering and Projects team is currently engaged in the construction activities at Blast Furnace-2, new Coke ovens, and Caster-2, with continuous e orts being made to ensure that project timelines are met.

Community is at the centre of our enterprise: TSK has always placed equal focus on building local community relationships through improving their socio-economic status, enabled through a range of initiatives in areas like Health, Education, Drinking Water, Infrastructure Development, Livelihoods, Skill up-gradation, sports and Women Empowerment among others. Dedicated teams deploy these initiatives through two focused approaches: (a) Communities entitled through the Resettlement & Rehabilitation (R&R) process through an R&R team. (b) Larger regional communities (predominantly rural) through the Tata Steel Foundation team in charge of Corporate Social Responsibility. iii. Tata Steel Meramandali

Tata Steel Meramandali (‘TSM) has produced hot metal during FY2022-23 of 4.60 MnT as against 4.59 MnT during FY2021-22, production of crude steel stood at 4.95 MnT in FY2022-23 as against 4.89 MnT in FY2021-22 and saleable steel production stood at 4.24 MnT in FY2022-23 as against 4.61 MnT in FY2021-22 thereby registering a decrease in production by 8%. The sales for FY2022-23 stood at 4.63 MnT as against 4.70 MnT in FY2021-22, registering a marginal decrease over previous year.

b) Marketing and Sales

During FY2022-23, the Company recorded sales of 18.22 MnT, which is higher over the previous year by 3%. Sales performance are summarised as below:

FY 23

FY 22

Automotive & Special products 2.38 2.22
Branded Products, Retail & Solutions 5.85 5.28
Industrial Products & Projects 6.91 6.10
Domestic 15.14 13.60
Exports 1.61 2.61
Domestic + Exports 16.75 16.21
Transfers (Wires, Tubes, IBMD, Agrico) 1.47 1.41
Total deliveries 18.22 17.62

Thus, FY2022-23 turned out to be the year of best-ever sales performance surpassing the previous best performance of FY2021-22. This was enabled by best-ever domestic sales performance achieved by all the three sales verticals.

Automotive and Special Products: FY2022-23 started off on a positive note with robust demand witnessed in Passenger Vehicle (‘PV) due to pent-up demand driven by easing of semiconductor supply situation and new model launches. Strong growth of Commercial Vehicle (‘CV) continued for FY2022-23 supported by replacement demand, improvement in the overall macroeconomic environment, pick-up in infrastructure, mining and construction activities and healthy eet utilisation levels. The sector ended the year with overall growths of 24% and 27% in PV and CV respectively (Y-o-Y).

Automotive sales constitute ~16% of Tata Steels annual domestic sales. It registered sales of 2.38 MnT in FY2022-23, a Y-o-Y growth of 7% with 20% growth in Hi-end sales (including 137 KT of PV outer panels and 253 KT of high tensile steels). The segment continues to command market leadership and high share of business in new model launches.

Branded Products and Retail (BPR): BPR (Flat Products) clocked sales volume of 4.10 MnT with Y-o-Y growth of 9%. Overall growth was driven by key Flat Product brands -Tata Astrum, Tata Steelium and Tata Kosh which registered growth ranging from 5% - 25% each and enhanced its market share to 23% (FY2021-22: ~21%). FY2022-23 was also a milestone year for two of the BPR-ECA brands - Tata Astrum (the Hot rolled brand for MSMEs) which has grown to become a 18,000 crore brand completed 10 years, and Tata Steelium (the cold rolled brand for MSMEs) completed 20 glorious years, while expanding their presence into 80+ micro-segments. Its foray into the retail space to cater to the small & micro customers/ fabricators, saw Tata Astrum super transacting actively with 1,400+ dealers and has registered a growth of 23% in FY2022-23. In addition, Tata Steel caters to 8,000+ ECA customers, through 85 ECA channel partners, for their regular needs of HR, CR & Coated steels, which are serviced in processed form through 57 service centres located near customer clusters.

Tata Steel B2C at products brands (Tata Kosh and Tata Shaktee) have introduced a digital learning platform for Distributor Sales force called ‘Learners Academy‘.

This initiative was adjudged as Winner of ‘Golden Peacock Award in the Innovative Product / Service category for FY2022-23. With 67 modules & 8,000+ skill completions, the app based online training programme is now graduating towards a campaign-based learning for focused & intensive learning. Tata Shaktee was adjudged the ‘Consumer Super Brand 2023 for the 6th consecutive time by ‘Superbrands India for brand value, years of existence, customer loyalty, business growth and brand equity. Tata Shaktee & Tata Kosh consumers are currently catered to by 8,000 dealers through, 42 B2C channel partners and with active promotion support from a large in uencer base.

Tata Tiscon (Long Products B2C brand) achived a growth of ~17% Y-o-Y & best ever sales volume in retail in FY2022-23. This was enabled by enhancing dealer base across the country from 6,200 to 9,000 dealers during FY2022-23 covering 8,000+ pincodes and enriched engagement with ~6,00,000 consumers and ~30,000 in uencers. Architect, Contractors & Engineers (‘ACEs) are the initial touchpoints for an Individual Home Builder (‘IHB) and play a pivotal role in providing the required guidance on design, building material including TMT rebar, cement, etc. Tata Tiscon launched Tiscon Grand Masters programme to collaborate with ACE community and enable consumers to build their dream home. 5,500+ ACEs have been onboarded on the programme in FY2022-23. Tata Tiscon conducted phase 1 of Tiscon Green Home Awards – a design challenge to recognise pioneering engineers who are designing houses with 550 MPa strength rebars instead of current practice of designing with 500 MPa strength rebar without compromising on the safety of structure. Academia from IIT Roorkee, NIT Trichy and Jadavpur University formed the panel of jury for the award.

Industrial Products, Projects and Exports (IPPE): IPPE is made up of five segments – Commercial & VAP, Engineering, Downstream (FP & LP), Wire rod & SBQ and Exports. IPPE sales during FY2022-23 was 8.51 MnT with domestic sales of 6.90 MnT and Exports of 1.61 MnT. In FY2022-23, Domestic sales for IPPE registered a growth of ~14% led by strong recovery in domestic demand and growth in discerning and enriched subsegments of Engineering and Downstream products.

Engineering segment: IPPE continued its focus on Engineering segments and Value-Added Products

(‘VAP) through product mix enrichment. Engineering

Segment achieved best ever sales at ~773 KT with Y-o-Y growth of 17% enabled by healthy growth across all key sub-segments such as Oil & Gas (O&G), Pre-Engineered Buildings (PEB), Railways and Construction & Projects. IPPE contributed towards construction of 3,300 km of O&G pipelines, ~47 Mn sq ft of PEB structures and production of ~23,000 L&E equipments. IPPE also achieved mix enrichment in L&E hi-strength steel supplies from 12% in FY2021-22 to 17% in FY2022-23 and grew supplies of API X70 in Oil and Gas by ~27% Y-o-Y.

Downstream: Flat Products (FP) Downstream business contributed ~897 KT sales in FY2022-23, a growth of 13% over FY2021-22 (792 KT). In our e ort to position ourselves as a leading supplier in serving to the Indian Appliance & Furniture, Building & Construction, Packaging, Electrical Lamination and Capital Goods Segments, we focused on serviceability and customisation of products. In FY2022-23, supplies to building and construction segments was 495 KT against previous year supplies of 432 KT for di erent products like FHCR (full hard cold rolled), and coated products. Tata BlueScope Steel Private Limited is a major partner in serving this segment where we have started coated products supply and in very first year achieved a volume of 47 KT. Other segments like packaging have grown from 37 KT to 47 KT, Capital Goods from 35 KT to 39 KT, and Electrical Lamination supply increased from 14 KT to 22 KT level in FY2022-23 with respect to previous year.

Long Products (LP) Downstream business contributed ~210 KT of sales in FY2022-23, a growth of 42% over FY2021-22. Tiscon ReadyBuild sales (Cut & Bend rebar solution) crossed 200 KT mark for the first time and Sm@rtFAB (Welded Wire Fabric solution) clocked

6 KT which accounted for 4x growth, both achieving their highest-ever sales. In our e ort to become leaders in Construction solutions by shaping the market and becoming knowledge-intensive leaders, we focused on capacity expansion, serviceability and customisation of solutions for all our customers. Key Marquee projects served through our solutions were Ahmedabad-Mumbai Bullet Train, Delhi International Airport, Chardham Tunnel Project, various Multinational Companies, and metro projects in Pune, Kanpur and Bangalore.

Wire Rods & SBQ: FY2022-23 sales growth of 15% happened in CWE (continuous welding electrode) segments (98 KT sales w.r.t. 86 KT in FY2021-22) as we focused on attaining the most preferred supplier status with our customers. New grades were developed in Tyre Bead (TB) segment as per changing BIS norms. We continued to maintain our share of business with discerning customers.

Exports: Steel exports contributed 1.61 MnT sales in FY2022-23. Post imposition of Exports duty for non-alloy steel in May 2022, in efforts to maintain exports levels in line with domestic market sentiments and inventory targets, team developed Technical Delivery Conditions (TDCs) for alloy steel with Boron along with technology and planning teams and ensured swift customer acceptance. This aided in Exports of 0.9 MnT Alloy Steel to 5 geographies. We scaled-up our initiative of digital exports via smart Letter of Credit

(L/C) and electronic documents by converting 5.2% of total volume through shipments to 3 geographies, on-boarding of 7 customers and pioneering of the first-ever Electronic B/L for imports into Turkey.

Services & Solutions: In FY2022-23, Tata Pravesh Doors and Windows registered Gross Merchandise Value of 216 crore. The installation figures have increased to 150K units in FY2022-23, a Y-o-Y increase of 72%. Nest-In achieved an order book of 490 crore, execution of 205 crore and sustained to be EBITDA positive ( 4.5 crore). Nest-In also augmented business by nurturing Key Account Customers (69% of order contribution) resulting in smooth handing over of ~125 projects spanning around 5 lakh sqft.

DigitalInitiatives: Tata Steel Aashiyana, an early engagement & e-commerce platform for Individual Home Builders (‘IHB) achieved a growth of 17% over FY2021-22. Aashiyana moved to 100% digital payment modes in December 2022 and is available as a mobile application for Android and iOS users. The platform successfully migrated to Adobes Digital Experience Platform (DXP) with features like Hyper Personalisation, vernacular content in 9 Indian languages and analytics-based insight generation. The Company rolled out its channel and sales management application, Sampoorna, across its retail business verticals. Currently, there are 12,000+ dealers across brands Tiscon & Shaktee connected through the application. Tata Steels digital platform for ECA customers, DigEca has enabled a direct touchpoint for ECAs to place enquiries, negotiate, place & track orders & register complaints. The platform has helped Tata Steel to track and reduce sales loss from an average of 9.5% in FY2021-22 to 7.5% in FY2022-23. Over 1,100 customers have now organically registered onto DigEca. Further, DigEca Mobile native app was launched for both Android and iOS ECA users. For its B2B customers, Tata Steel rolled-out its end-to-end supply chain visibility platform, COMPASS, to a larger set of customers across at products, long products, Automotive, Tubes and Wires businesses. To enhance customer experience and convenience in B2B segment, the platforms UIUX (User Interface User Experience) was redesigned and Mobile native app was launched ensuring easy accessibility on hand-held devices. c) Engineering & Projects

Engineering & Projects (‘E&P) continued its e ort to support Tata Steels growth and sustenance goals by ensuring capital projects progress in FY2022-23 amidst somewhat easing but continued recessionary pressure and sporadic supply disruptions, due to geopolitical tension. Significant progress has been made in growth projects at Tata Steel Kalinganagar (‘TSK), Iron Ore Mines and other sustenance & improvement projects at Jamshedpur and Meramandali. Prioritisation of capex deployment is being done continuously considering future market opportunities, decarbonisation/sustainability impact and business value proposition.

During FY2022-23, the division has successfully completed the following projects:

•Paste Thickeners at Khondbond and Joda Iron Ore Mine.

•Commissioning Pellet Plant at TSK.

•First Full Hardened Cold Rolled (FHCR) Coil dispatch from CRM (Cold Rolling Mill) – PLTCM (Pickling and Tandem Cold Mill) at TSK.

•Dismantling of Batteries and major structures in Coke Plant at TSJ.

•Installation of 3 solar power plants at TSJ.

•Revamping of Pickling line of Narrow Cold Rolling Mill (NCRM) at TSM – Khopoli.

The division has successfully completed some of the first time initiatives such as single heaviest (680 MT) lift for erection of Stove Shell of Blast Furnace #2 at TSK, casting of largest raft (2,494 Cu.M) foundation in Iron Ore Processing Plant at Noamundi, largest single pour concreting (3,055 Cu.M) in Tertiary Treatment Plant, use of implosion technique for demolition of Chimney#5, 6 & Coal Tower#3 in Coke Plant at TSJ in running plant with zero deviation from planned line of fall and in-house manufacturing of Stamping, Charging & Pushing (SCP) machine for Coke Plant at TSK, 40 Ton Automatic Stacking & Reclaiming System crane for Cold Rolling Mill at TSK, 300 Ton test wagon & 2nd largest ladle turret in India at Tata Growth Shop (TGS). The key projects currently under execution are:

•Capacity expansion at TSK Phase 2 with a target of commissioning Caster#2, Continuous Annealing Line and progressing on other key facilities.

•Progress on electro-mechanical erection for Iron Ore Processing Plant at Joda East and Noamundi Iron Ore Mine.

•Engineering for 1 MTPA New Battery and mechanical erection for Air Separation Unit at Jamshedpur.

Tata Steel has started planning for doubling its crude steel capacity to ~40 MTPA by 2030. Growth proposals across multiple locations are being developed while ensuring consideration to decarbonisation targets. The Division has taken up the following key initiatives to improve its future readiness for achieving this target:

•Capability building initiatives in some of the key knowledge domains such as Project & Construction management and Value Engineering through tie up with leading academia and professional bodies.

•Improvement in Construction safety.

•Strengthening in-house manufacturing capability.

•Ramping up Infrastructure amenities and logistics capacity

•Increasing vendor base in identified categories.

•Developing smart and integrated digital platforms for the division.

•Benchmarking the processes against industry best practices. d) Sustainable Steel Business Initiatives i) New Materials Business

The New Materials Business (‘NMB) was set up with the vision to create a knowledge intensive business in materials of future. Set up in 2018, the business has grown at a Compounded Annual Growth Rate (CAGR) of ~200% over the last two years. NMB currently has three material verticals – Composites, Graphene and Medical Materials.

Fibre Reinforced Polymer (FRP) Composites

Composites industry in India is expected to grow at a CAGR of 8-10% in FY2023-24. Tata Steel composites business is enabling this ecosystem by playing the role of an integrator in an otherwise fragmented industry structure.

Tata Steel composites business is driving the adoption of sustainable lightweight solutions in Industry, Infrastructure and Railway sectors. In FY2022-23, it is slated to be amongst the top 3 Indian composite players. The business has continuously enriched its basket of offering by developing new products such as, Silicon Carbide lined pipes for Fulel Gas De-sulphurisers (FGDs). The business has been leveraging group synergy to offer world class solutions to Indian Railways. It has been awarded an order for complete seating system for 22 rakes of Vande Bharat Express. The manufacturing facility at Khopoli, Maharashtra, which will produce honeycomb-cored sandwich panels for railway applications, will start commercial operations by Q3 FY2023-24.

Graphene

The Graphene business has developed six technology platforms. WONDRA range of conveyance, construction and coating solutions on Elastomers, Thermoplastics and Dispersions technology platforms have witnessed strong traction in the market. Applications of Graphene in areas of Energy, Fibres and Filtration are under incubation. Leading the Graphene revolution in India, the business in collaboration with Government of India has established the first Graphene Centre in India at Kochi. The business has also entered into a joint development programme with University of Manchester, to conceptualise and commercialise Graphene related applications.

Medical Material and Devices

The medical materials business further consolidated its position in the import dominated Advanced Ceramics material market with the dedicated bio-ceramic production facility running at 100% capacity. During the year, four grades of Hydroxyapatite were commercialised. This is in line with the business vision to create a ordable and global standard health technology solutions for India and the World and, making India self-reliant in the medical technology space. Upscaling and validation for Collagen, Gelatin and Amino acid formulations were also completed during the year. ii) Steel Recycling Business

Tata Steel has always prioritised its role as a corporate citizen towards the people & planet. Setting up Steel Recycling Business (‘SRB) is a de nitive step towards sustainable Steel production.

The SRB plant at Rohtak achieved ~280 KT dispatch with a revenue of ~ 1,255 crore in FY2022-23. This plant has achieved almost 100% capacity utilisation in Q4 FY2022-23.

SRB has leveraged the power of digital to set up robust supply chains, as the collection and aggregation of scrap for the recycling plant entails reverse logistics. FerroHaat, a digital app, was launched to source steel scrap from the scrapyards. This app has enabled deep penetration into the value chain & fostered transparency and ease of doing business in a hitherto trust de cit sector. The scrap is procured through the digital FerroHaat app, a first-of-its-kind in the world. Over 180 vendors have been registered on the app for supply of scrap.

Indian scrap market is poised to grow at a CAGR of ~7% to reach ~45 MnTPA by 2030. Policies like Vehicle scrappage policy and Steel Scrap Recycling Policy are likely to give an impetus to this sector. However, India is currently a scrap-de cit nation & imports a considerable amount of scrap from the US & Europe where there is surplus of scrap. Further scrap imports are likely to become more di cult owing to protectionist measures by exporting countries. Accordingly, the role of SRB gains prominence in securitising the supply chain of scrap which is one of the future raw materials for steel production.

Besides Sustainability benefits, the SRB is also dovetailed with the long product growth strategy of Tata Steel. Plans are afoot to set up EAFs & Mini Mills for forward integration into long products. This would pave the way for growth of long products in a sustainable manner. e) Tubes Division

Tata Steels Tubes Strategic Business Unit is a leading manufacturer of pipes and tubes in India having its manufacturing facility situated at Jamshedpur, Khopoli, Sahibabad and Hosur with an annual production capacity of around ~1,300 KTPA. The four main lines of businesses are Structural Tubes (Tata Structura), Precision Tubes (Boiler, Automotive and General Engineering), Conveyance tubes (Tata Pipes) and API Pipes (Oil and

Gas Pipelines). Tubes Division has also ventured into the Services and Solutions segment with their latest offering Tata Ezy t (door and window frames).

Tubes Division has expanded production capacity to 1,300 KTPA by addition of 4 new Tubes Manufacturing Partners (264 KTPA) in FY2022-23. Our product portfolio will now include High Aspect Ratio (‘HAR) Tubes and capacities of thinner casing pipes, Tata EzyFit (door and window frames) and Large Dia Pipes (5" to 12") will increase. Increased focus on exports with ~5.5 KT of exports in FY2022-23.

While the demand for Electric Resistance Welded (ERW) steel tubes and pipes was stable across the year, the high volatility in steel prices especially in the first and last quarters of the year owing to the Russia-Ukraine tension and import duty imposition led to some speculative calls by customers. The stable gap between HRC and secondary steel prices have ensured that the in ltration of strip (Patra) based tubes was low. While the O&G segment remained a ected by the international gas crisis, the tube demand from automotive segment is yet to reach pre-pandemic levels.

The production and sales performance of Jamshedpur plant is as below:

Production and Sales of Tubes Division (KT)

Note: Tubes represents Jamshedpur tubes division and for FY2022-23 it represents Total tubes division including Jamshedpur, Khopoli, Sahibabad and Hosur.

During FY2022-23, the production and deliveries of Jamshedpur were better by 77 KT and 64 KT respectively over FY2021-22. The tubes and pipes of TSM was reported under steel, which is being dis-continued post-merger.

Key Business Highlights:

•Achieved best-ever production of 890 KT against previous best of 800 KT.

•Achieved best-ever Sales of 880 KT against previous best of 792 KT.

•Achieved lowest-ever customer claims at 775 PPM.

•Increase in market share from 11% to 14% in Tata Structura Retail Channel via channel augmentation.

•16% Y-o-Y growth achieved in the Industrial and Infrastructural segment in FY2022-23 through efective utilisation of TSM Khopoli Large Dia Pipe (LDP) mill capacity.

Recognition:

•Tata Structura won Global Brand Excellence Award by World Brand Congress.

•Tata Structura Hollow Sections becomes the 2nd Brand in Tata Steel after Tata TISCON to get EPD (Environmental Product Declaration) certi ed.

•Tubes Division becomes the first Tube Manufacturer in India to receive ResponsibleSteelTM Certi cation.

•Tata Structura was awarded with ‘customer centric excellence award at the GCC Business Leader of the Year event organised at Dubai, UAE. f) Wires Division

The Companys Global Wires India (‘GWI) Business Unit is the largest manufacturer of steel wires in India. The manufacturing plants are located at Tarapur, Pithampur and Jamshedpur, and contribute to nearly 65% of its sales volume, with remaining 35% being catered by Wires Processing Centres. GWI caters to the requirements of the Indian Automobile, Construction and the rural markets with various products.

The production and sales performance is as below:

Production and Sales of Wires Division (KT)

During FY2022-23, the division achieved a production of 460 KT, higher by 23 KT over FY2021-22 and deliveries of 469 KT higher by 30 KT over FY2021-22 with addition of new manufacturing capacity for Low Relaxed Prestressed Concrete (LRPC) and debottlenecking initiatives.

Key Business Highlights:

•A new LRPC manufacturing line of 36 KTPA started to cater to rising infrastructure requirements as a result of Governments focus and initiatives in the sector.

•Enhancement in the downstream Services & Solutions portfolio with augmentation of Knotted Fence capacities and introduction of new product 3D Weld Mesh in the product portfolio.

•IHT spring wire capacity ramped up to 7.8 KTPA with speedy approvals from all major customers like Gabriel, Endurance, Bajaj Auto & Honda and thereby facilitating Atma Nirbhar Bharat by substituting imports.

•Capacity enhanced in Aayush coated GI wires to 30 KTPA.

•Launched the premium and compacted binding wire PIP which occupies 33% lesser storage space and is more resistant to damage during transit.

Recognition:

•Tata Wiron was awarded the Best Quality Improvement Project award in the CEATs Quality Based Management Excellence League – A contest held by CEAT for its vendors in April 2022.

•Tata Wiron won TSL Environment Excellence Green Award22 at Upstream & Downstream category.

•Tata Wiron – LRPC has won ‘Most Trusted Brand Award of the Year in the ‘Construction Times BAM Awards 2022.

•Tata Wiron received Best Innovative Product Award for Knotted Fence and Product Launch of the Year 3D Welded Mesh under Fencing Category in December 2022.

•Tata Wiron – IHT has won the prestigious ‘National Pride Excellence Award in the category ‘Most promising New Product in December 2022.

•Tata Wiron – LRPC has won Most Preferred Brand in Prestressed Concrete Projects at Construction Times Awards 2023 in January 2023.

•Tata Wiron – IHT won the prestigious ‘Business Leadership Award for the category ‘Emerging Product in the Steel Industry.

g) Industrial By-Products and Management Division

Industrial By-product Management Division (‘IBMD) manages solid wastes or by-products generated across the steel value chain. The division operates on 3R (Reduce, Reuse, Recycle) principles of circular economy to create value from waste, and ensures just-in-time supply of recyclable or remelting scrap to steelmaking units. During the year under review, the division handled ~16 MnT of by-products across locations. Through a series of sustainable value creation initiatives, the division delivered its best ever revenue performance, and witnessed a 24% Y-o-Y business growth in FY2022-23. The product portfolio of IBMD spans across 25+ categories with over 250 SKUs. IBMD strives to remain an industry benchmark in managing by-products through deployment of state-of-the-art technologies and new product development, thereby promoting circularity.

In the year FY2022-23, the division continued its journey to augment the infrastructure for handling and supply of steel scrap to steel melt shops at TSJ, TSK and TSM. In line with the sustainability initiative of maximising scrap-based steelmaking to lower our COFF emissions, over 1.5 MnT of steel scrap was recycled in the melt shops across locations in FY2022-23 (previous best: 1.2 MnT in FY2021-22).

During the year under review, in a pioneering initiative, the steel slag supplied by Tata Steel has been used to construct the road connecting Sino-India border in Arunachal Pradesh, under Project Arunank by Border Roads Organisation (BRO). Continuing with dedicated market making activities, IBMD ramped up the sales of the two branded steel slag products - Tata Aggreto and Tata Nirman. While Tata Aggreto has been utilised extensively in road construction applications, Tata Nirman has been established as a raw material of choice for cement and brick manufacturing segments.

At TSK, the in-house developed technology of accelerated weathering (steam aging) of LD slag has been successfully deployed, which has facilitated supply of Tata Aggreto from TSK as well. As an outcome of the consistent pursuit of developing slag-based downstream products, IBMD along with Technology group, manufactured green pavers and beton blocks by replacing natural aggregates with processed slags. Trials of these products have been successful and going forward, mass production and horizontal deployment across locations will be taken up through External Processing Agencies (EPAs). At TSJ, the use of briquettes developed from LF slag nes (Ladle

Furnace Slag) has been established in steelmaking, which has potential to reduce lime consumption thereby improving resource e ciency. Through above initiatives, 100% LD slag utilisation has been achieved at all sites including and especially at TSM (for the first time). In another key achievement, IBMD has ramped up the sales of Ground Granulated Blast Furnace Slag (‘GGBS), a Greenpro certified, value-added product based on Blast Furnace slag as partial replacement of cement in concrete and achieved best ever sales of ~87 KT in FY2022-23 (previous best: 68 KT in FY2021-22).

The new Processing & Sales Yard of IBMD at Marine Drive, Jamshedpur saw significant ramp-up of Flat Product (FP) scrap processing, providing major boost to the value-added metallics portfolio. The facility, which was inaugurated in November 2022, is equipped to deliver customised offering of Processed FP scrap to the customers, thereby generating incremental margin for the Company. With focus on safety and digitalisation, the sales yards infrastructure has been strengthened and has 100% CCTV coverage, man-less weighbridge operations, smart warehouse system and new transport parks with unidirectional tra c ow have been developed. Further the similar facilities are being commissioned at TSK & TSM for value addition to FP scrap. As a Retail Value Management initiative for Coal By-products, ‘Sampark campaign was rolled out with an aim to increase reach and share of business to ramp up sales of Coal Tailings in line with expansion plans of West Bokaro. During the year, IBMD developed a state-of-art Transport Park at Bhelatand, Jharia and commissioned a 5-lane wheel washing facility at West Bokaro aimed at improving environmental performance.

Going forward, IBMD continues to be guided by the long-term sustainability goals of Tata Steel with focus on circularity. A pipeline of projects based on circular business models are underway, such as commencement of sales of Ferroshots (granulated pig iron) from TSJ, LD slag granulation facilities at TSM and TSK, downstream products using LD slag such as Interlocking pre-cast blocks, tetrapods, etc. The infrastructure for storage & handling of remelting scrap across plant locations is being strengthened further to meet increasing requirement of scrap recycling in steelmaking in line with the Long-Term Plans.

Recognition:

•Recognised as 1st Winner of ‘Excellence in 3R for Industry Award (for 3rd consecutive time) at the CII International Conference on Waste to Worth 2022, for the exemplary work in managing own waste generated from the Jamshedpur plant.

•Adjudged as ‘Company of the year in Large Enterprise Category at Indian Circular Economy Forum (ICEF) 2022 as a recognition for adopting innovative & agile practices to promote Circular Economy.

•Received ‘Most Innovative Environmental Project award at 9th CII National Award for Environmental Best Practices 2022. The award was conferred for sustainable use of steelmaking slag in National Highways. h) Ferro Alloys and Minerals Division

The Sukinda Chromite mine and Gomardih Dolomite mine leases expired as per the mining regulations on March 31, 2020. The Sukinda Chromite Mines was put up for auction and subsequently Tata Steel Mining Limited (formerly TS Alloys Limited), a wholly-owned subsidiary of Tata Steel Limited had participated in mining auction in Odisha for Sukinda Chromite Mine and won the auction for the mine. Owing to the shift of chrome business to Tata Steel Mining Limited, the Ferro Alloys and Minerals Division (FAMD) business is now limited to servicing the Steel Plants with Manganese alloys only and hence does not require any detailed discussion. i) Bearings Division

Our Bearings Division is one of Indias largest quality bearing manufacturers, having its manufacturing facility situated at Kharagpur, West Bengal with an annual production capacity of 40 million bearing numbers. The Company is foremost in the manufacturing of a wide variety of bearings and auto assemblies and the product range includes Ball Bearings, Taper Roller Bearings, Hub Unit Bearings, Clutch Release Bearings, Double Row Angular Contact Bearings, Centre Bearings and Magneto Bearings. The division is the only bearings manufacturer in India to win the TPM Award (2004) from Japan Institute of Plant Maintenance, Tokyo.

In the Domestic two-wheeler segment, the year witnessed a production growth of 17% from 17.7 Mn in FY2021-22 to 19.3 Mn in FY2022-23, which is primarily due to the recovery in urban segment. However, in the Export segment there was a sharp (18%) drop from 4.4 Mn in FY2021-22 to 3.6 Mn in FY2022-23. This was primarily due to the devaluation of currency in key export markets. The Domestic Tractor segment witnessed a 12% growth from 0.96 Mn in FY2021-22 to 1.08 Mn in FY2022-23. Tata Bearings serves Major OEMs in this segment.

The production and sales performance is as below:

Production and Sales of Bearings Division (mn nos.)

During the year under review, the division produced ~34 (mn nos.) and achieved deliveries of ~33 (mn nos.) which were higher over FY2021-22 by ~4.1 (mn nos.) (14%) in production and by ~4.2 (mn nos.) (14%) in deliveries respectively due to increase in demand.

Key Business Highlights:

•Bearing division has started commercial supplies to major EV two-wheeler manufacturers and is in the process of getting approvals from major OEMs.

•To enrich manufacturing set up, following facilities were added during the year: a. 2 Nos of Automatic Sizing machine. b. 1 No of Auto Greasing & Shielding (Single & Double RS/ZZ) Machine with Hopper. c. 500 LPH Water demineralisation Plant.

Recognition:

Bearings Division received ‘2022 India Long Term Association award from Bosch Limited in ‘Bosch India Regional Supplier Awards 2022 for Material Field Category – Bearings. j) Business Improvement Initiatives i) Total Quality Management and Shikhar 25 (Operational Improvement Programmes)

The Total Quality Management (‘TQM) way of working has become a part of the DNA of Tata Steel for the past several years. The integrated TQM framework is used as the guiding principle to drive TQM practices in the Company.

At group level, Tata Steel remained the ag bearer on Business Excellence by continuing its lead in DATOM (Data and Analytics Target Operating Model) assessment and InnoVista awards. Tata Steel also organised group learning mission this year as part of our commitment to share the identified best practices with the group companies. 31 delegates from 18 Tata Group Companies participated in this mission and visited the operating facilities at TSJ and TSK. In our endeavor to make Tata Steel world class manufacturing organisation, we have extended the scope of 5S & VWM (Visual Workplace Management) to the service functions and also Total Productive Maintenance at Raw Material and Khopoli locations.

Recognitions and Felicitations: A. At Group Level

•Tata Steel received the coveted ‘JRDQV Award and was also recognised as ‘Benchmark Leader in JRDQV function held on July 29, 2022, under the agship Tata Business Excellence Model (TBEM).

•Tata Steel registered its best performance at Tata InnoVista by bagging 6 awards (including 1 most innovative partner) out of 15 total awards held on October 12, 2022.

B. Forums of Repute

•International Convention on Quality Control Circles (ICQCC): 4 SGA (Small Group Activity) and 1 MASS+(Manthan Ab Shop oor Se+) team secured the highest category ‘Gold award in 47th ICQCC held during November 15-18, 2022 in Jakarta, Indonesia.

•National Convention of Quality Concepts (NCQC):

22 SGA circles and one MASS+ team won the Par Excellence award (highest category) in 32nd NCQC held during December 27-30, 2022 at Aurangabad.

•Asian Network for Quality (ANQ): 3 papers from India, all belonging to Tata Steel received ‘Best Paper Award in 20th ANQ Congress 2022 held virtually on October 26-27, 2022, at Beijing, China.

•International Quality Innovation Award:

2 applications of Tata Steel titled ‘Online Quality Monitoring & Control at Sinter Plant and ‘Healthy Steel were awarded under the categories Business Innovation and Potential Innovation respectively in the International Quality Innovation Award organised by China Association of Quality (CAQ) on February 23, 2023 in Almaty, Kazakhstan.

•Tata Business Excellence Convention (BEC) 2022 was held in Mumbai on December 18-19, 2022, to celebrate the excellence in initiatives across the Tata Group. During the event, Tata Steel received awards under the categories ‘Building Excellence Capability and ‘Significant Engagement in Improvement Interventions for demonstrating highest engagement across the multiple channels of Improvement Interventions of the Group.

•Annual Conference of Indian Society for Quality (ISQ): 3 projects from Tata Steel were awarded under the categories ‘Quality Sustainability Award and ‘Quality Innovation Award in the Annual Conference of Indian Society for Quality (ISQ) held in Chennai on December 9-10, 2022.

•ISQ Symposium: One of the Tata Steel papers titled ‘AMRIT – To improve value realisation from co-product steel powered by advanced analytics won the 2nd best paper award in the 1st ever ISQ Symposium held at Bangalore on September 23-24, 2022.

Treading New Paths:

•Tata Education Excellence Programme (TEEP) in collaboration with Tata Steel Foundation and Gulmohur High School, Telco organised ‘Career Expo 2022 for the Senior Secondary school students of Jamshedpur on November 18-19, 2022. 25 colleges and universities from across the country participated where 3,500+ students and 170 teachers from 56 schools visited the Career Expo 2022.

•Tata Steel InnoVista: In line with Tata Group InnoVista awards, ‘Tata Steel InnoVista programme has been rolled out to enhance and further promote culture of Innovation at Tata Steel this year. It saw an encouraging response with 368 Innovative entries across 5 award categories. The top 18 entries selected by the Jury members got recognised on July 20, 2022, in an Apex level function at Steelenium Hall with participation from Group Innovation team.

•TSM (Meramandali, Khopoli and Sahibabad) and its 6 associated sites were recognised through a single Integrated Management System IMS (QMS

+ EMS + OHS) certi cation. This single certi cation enables standardisation of systems, cross-learning & deployment of audit findings and effective management of audits.

ii) Shikhar25 (operational improvement programmes)

The Shikhar25 programme, a multi-dimensional & cross functional initiative, is an EBITDA focused improvement programme across the value chain. A governance structure comprising cross-functional teams called ‘IMPACT Centres are put in place across Tata Steel Group to achieve the objectives of Shikhar25. At present, there are 50 IMPACT Centres functioning across the value chain wherein different TQM techniques are deployed for improving operational e ciency, process improvements, product mix optimisation, waste reduction and recycling, energy e ciency and revenue maximisation. The process includes comparing operating KPIs with internal and external benchmarks and identifying enablers to achieve best in class Yield, Energy, Throughput & Quality, etc. The initiatives include marketing and sales area and along with the digital initiatives help Tata Steel to improve customer connect. During the year under review, the Company, through its Shikhar25 programme achieved performance improvements of 6,309 crore (including 4,299 crore of value protection initiative).

With increase in complexity due to multilocational functionality, it was important to be agile enough to learn, evolve and transform faster, and to keep pace with the changing business needs. The impetus was on driving value by enabling global optima and resource synergy for the TSL Group resulting in synergy benefit of ~ 446 crore. k) Safety Health & Sustainability

Health and Safety: The Company is committed to prioritising Health and Safety Management and achieve Zero Harm. To accomplish this, the Company is pursuing six strategies, which include building safety leadership capabilities at all levels, reinforcing contractor safety management standards to ensure zero harm to contract employees, improving the competency and capability to identify hazards and manage risks, enhancing road and rail safety throughout the Company, achieving excellence in process safety management, and establishing industrial hygiene while also improving occupational health. During the year under review, the Company undertook several initiatives, including the establishment of a Practical Safety Training Centre in Jamshedpur. This initiative exemplifies the Companys commitment to improve risk perception of the workforce by imparting hands-on training on di erent modules such as Working at Height, Material Handling, Gas Safety, Con ned Space, Heavy vehicle simulators, First Aid & CPR, and leveraging advanced technologies to visualise potential hazards through virtual reality scenarios. Moreover, the Company introduced a Behavioral Safety Theme Park, which serves as a forum for promoting learning through interactive discussions and fostering a cross-learning culture. It focuses on four primary causes of injury that occur within the organisation, namely Slip, Trip & Fall, Manual Task and Tools, Moving Machinery and Fall of Object, where personnel behavior is a crucial contributing factor. The Company also made e orts to alleviate congestion of heavy vehicles on the road by constructing a new transport park at Meramandali, capable of accommodating 110 trailers/trucks, complete with amenities such as restrooms and canteens for heavy vehicle drivers. Furthermore, to reduce the risks posed by the simultaneous movement of heavy vehicles and two-wheelers on the road, two-wheeler entry has been restricted at TSM and TSK. A segregated timing has been implemented at TSJ to regulate the movement of two-wheeler and heavy vehicle and prevent their simultaneous movements.

To promote a positive safety culture throughout the organisation, the Company organised the Safety, Health, and Environment Reward & Recognition Function for the third time. This programme aims to recognise and reward employees / departments for their remarkable contributions and drive the positive safety culture at all levels within the organisation. This policy has now been extended to vendor partners and non-officers as well. The Company made considerable efforts to enhance the safety competency of its workforce by training them on simpli ed safety standards through e-modules and providing them safety training at Safety Leadership Development Centre, Jamshedpur. The safety of contractors has continuously been a primary focus for the Company. During the year under review, the Company undertook various initiatives like ‘Ghar se Ghar Tak programme to sensitise its contractor workforce. Contractor Safety Management System (CSMS) has been deployed in all stockyards and Steel Processing Centers (SPC) of Tata Steel as well as across Tata Steel Group Companies.

Moreover, the implementation of the Centre of Excellence

(CoE) methodology for Process Safety has gained traction, leading to improved process safety competencies among employees. Presently, the CoE-driven process safety initiative has been rolled out in most of the high hazard departments at TSJ, TSM & TSLP. To create a safer, more resilient, and sustainable organisation, identi cation of the top five risk across all departments of TSL India was done and implementation of strategic risk mitigation plan is in progress. Advance level training programme on Process Safety was conducted by National Examination Board in Occupational Safety and Health (NEBOSH) certi ed experts.

To provide a holistic approach towards the adoption of digital and technology in maintaining safety within the organisation, the Apex Digital and Technology Safety Subcommittee prioritised standardising technological interventions for critical equipment while also improving the maturity of digital and technological projects, scaling them across Tata Steel.

Occupational Health & Safety: Tata Steel has implemented a comprehensive Industrial Hygiene programme which includes identi cation of occupational health hazards, risk analysis, and assessment of actual exposure through hazard quanti cation. It also focusses on implementation of hazard control measures to maintain minimum exposure level and to reduce occupational health related risks. During the year under review, over 500 awareness sessions on ‘Health & Well-being have been organised across Tata Steel India for the employees and contract employees. Tata Steel has been recognised for ‘Wellness at Workplace by World Steel Association in Safety & Health Excellence Recognition Programme 2022. Fatality of contract employees has been the topmost safety concern for the Company. It is with deep regret that the Company reports 4 fatalities during the year under review. The Company launched hazard specific Safety campaigns viz. ‘Slip/Trip/Fall, ‘Hands are not Tools, ‘Road Safety, etc. across locations to address gaps and improve safety awareness. Lost Time Injuries (LTIs) at Tata Steel (India & South-East Asia) have reduced by 16% from the previous year. Tata Steel Meramandali achieved more than 50% reduction in LTIs. Slip/Trip/Fall related LTIs remain a major concern.

At Tata Steel Europe, Health and Safety continues to be of utmost priority. It is with deep regret that Tata Steel at UK reports one (1) fatality during the year under review. An integrated health and safety management system ensures a consistent approach to health and safety throughout the organisation. The Health and Safety Management System follows the Plan, Do, Check, Act management model, which is a process of continuous improvement.

Sustainability: Tata Steel is committed to sustainable development in its operations and has embedded principles of resource efficiency, circular economy, minimising ecological footprint, zero harm (health of safety of workforce) and care for community in its working philosophy. Tata Steel has taken short medium and long-term goals towards carbon reduction and has built supporting governance processes to ensure we are continuously aiming to the achieve the targets set. We also have set similar targets on freshwater consumption, minimise loss of biodiversity and coverage of 100% critical supply chain partners for ESG risk assessment. Furthermore, United Nations Sustainable Development Goals (‘UN SDGs) form an integral part of the Companys long-term strategy and the Company has undertaken internal assessment for prioritising the goals and started monitoring the actions set to achieve the targets for each applicable SDGs.

Tata Steel supports and complies with the domestic and international standards and regulations/laws including those related to labour and human rights, such as the Universal Declaration of Human Rights, the UN Principles on Business and Human Rights, and the International Labour Organization Convention. Tata Steel has introduced a policy and a framework for shared growth between suppliers, distributors, and Company for supply chain management with ESG perspective through the deployment of ‘Responsible Supply Chain Policy. To accelerate our efforts in becoming a leader in sustainability, we use Life Cycle Assessment (‘LCA) tool efectively to evaluate and communicate our products environmental performance across its lifecycle. Our LCA studies are done in accordance with worldsteel LCA methodology which are guided by ISO 14040 and ISO 14044 standards. Aligning with the goal to cover all steelmaking and downstream sites under LCA, this year we have completed the LCA study for downstream facilities at TSM Khopoli, TSM Sahibabad and CRC West covering a total of 8 di erent product categories. In FY2022-23, Tata Steel published its first Environment Product Declaration (EPD) for Steel Rebar for facilities in Jamshedpur Works as well as other manufacturing SPC (Steel Processing Centre). This was followed by EPD for Steel structural hollow section under the brand Tata Structura manufactured at Tata Steel Tubes division along with other di erent production units. EPD was published for Steel Hot Rolled Coil covering all manufacturing locations across Jamshedpur, Kalinganagar and Angul. Furthermore, Tata Ezy t, which is a brand of innovative tubes for windows & door frame section received GreenPro certi cation. We have also carried out a LCA study for one of our Fibre Reinforced Polymer (‘FRP) product to understand its life cycle environmental impact. In the coming years, we aim to receive eco-labels (‘GreenPro) and transparently disclose environmental performance for our key products manufactured across various sites to support our customers with product related sustainability information.

At our UK operations, we developed the Product Assessment Carbon Indicator (PACI) tool. This streamlines the process of undertaking life cycle studies of products and enables an understanding of greenhouse gas (‘GHG) emission hot spots and trade-offs in the steel product value chain, which can be used to inform new product developments and optimise existing manufacturing routes. PACI has been used to support collaborative projects with customers and to support sharing and learning about opportunities for emissions reduction over the products life cycle from manufacture through to use and nally end-of-life: for example, working with an automotive OEM to examine all aspects of materials selection, including material type, steel grade, gauge, and aspects of formability and part design. Another example has been the use of the tool in understanding the trade-off between benefits in use from improving motor e ciency versus embodied GHG emissions associated with di erent grades of electrical steels. The tool has recently been recognised by the World Steel Association, winning a Steelie award for Excellence in Life Cycle Assessment. Tata Steel has made significant e orts to persistently improve and enhance its performance in biodiversity conservation and significantly reduce its impact on the ecosystem. Our Indian operations are not located in any of the identified biodiversity hotspots or protected areas. During FY2022-23, we developed the Biodiversity Management Plans (‘BMP) for Tarapur and Sahibabad. We have developed BMPs for 15 locations and plan to cover 100% sites to assess the impact and dependency of direct operations on biodiversity by 2024. We have planted over 3.2 lakh saplings of native species across locations. Kadma Biodiversity Park is spread across 13.5 acres where 5,650 trees and 4,650 shrubs have been planted, the park has 2.3 Km of walking trail, a yoga and meditation zone, bird watching areas, rainwater harvesting ponds, lilly ponds, butter y zones, and fruit and bamboo orchards. The park houses several clusters of native species of trees planted as groves. It also has bird and squirrel nests, deep forest areas, grass lands and an information centre for ora. At our UK operations, we are guardian to large areas of natural habitat, including several Sites of Special Scienti c

Interest (‘SSSI). In addition to meeting our responsibilities for protected sites, we also look for opportunities to encourage biodiversity on other landholdings and thereby contribute to protecting the natural heritage of UKs landscape. Former blast furnace cooling lagoons at our Shotton site are now a haven for wildlife. Attracting 12 nesting pairs of common tern in 1970 with the creation of a small raft on the lagoon, the area has become home to one of the UKs largest colonies of this vulnerable bird species and has seen over 20,000 chicks fledge successfully. The site has been a nature reserve for 50 years and a designated SSSI since 1990. In 2021, a project team of apprentices, volunteers and supply partners refurbished the colony, creating new tern islands on the lagoon, connected by a new steel walkway. The project, assisted by a Welsh government grant, involved the donation of steel for a base and moving 130 tonnes of shingle from the shore onto the nesting islands by helicopter to refurbish the islands, creating a nesting site that the migratory birds will return to, for years to come.

Climate Change: India is currently the second-largest steel-producing country in the world after China. Demand of steel in India is projected to increase 4-5 times by middle of century backed by domestic steel consumption required for infrastructure growth in the country. The National Steel Policy envisages 300 MTPA steel production in India by 2030. Accordingly, we will aim to protect our market share in line with the growing steel demand in the country.

Indias growth trajectory in the coming decades poses key challenges for the domestic Steel Industry. Firstly, many of the near-zero emission steelmaking technologies are currently at pilot scale and are yet to be become viable for large scale commercial production. Secondly, due to relatively young stock of steel infrastructure, buildings and goods indicates scrap availability would not be able to cater to this increased steel demand.

We have plans in place to grow our capacities significantly through Electric Arc Furnace (‘EAF) route, however due to issues related to scrap availability and logistics, primary steelmaking would be predominant in our upcoming capacities. Hence Carbon Capture & Utilisation and Generation & usage of Green H2 in steel value chain are identified as our R&D technology leadership focus area. We are actively engaging with technology companies, academia, companies from other sectors having similar challenges on development and scale-up of deep decarbonisation technologies.

A 5 TPD pilot plant has been successfully commissioned at Jamshedpur to capture COFF from blast furnace gas. The captured COFF is being utilised for water treatment at a steelmaking unit. We are currently working on another pilot on Carbon Capture and Utilisation to produce value added products.

We are evaluating our investments in di erent existing technology choices (DRI production using either Natural gas/Coal Bed Methane or syngas from coal gasi cation) which can enable the transformation of our business models towards production of net zero emissions steel in long term once green Hydrogen and Carbon Capture technologies becomes technologically and commercially viable.

Tata Steel has developed a low carbon transition strategy which progressively reduces reliance on fossil fuels. Following are short, medium and long term goals.

Short Term:

•Entry into Steel Recycling Business to create a formal circular economy for steel in India.

•Utilisation of higher scrap charge in the steelmaking process in India.

•Adoption of best available technologies and improvement in existing processes.

•Improving quality of raw material (iron ore and coking coal).

•Increase share of renewable energy in power mix.

Medium Term:

•Capacity addition in India using scrap Electric Arc Furnace (EAF) route.

•Shifting from metallurgical coal to cleaner fuel like natural gas/Coal Bed Methane.

•Upscaling pilots of CCU and Hydrogen based steelmaking.

•Piloting new technologies in partnership with academia on pilot projects which are at low Technology Readiness Level (TRL) stage.

Long Term:

•Scale up of HIsarna technology.

•Adoption of DRI route capable to operating with present day and future reductants e.g. Natural gas/ Coal Bed Methane or Syngas from coal gasi cation or Hydrogen.

•Sustainable production, storage, and use of H2 across the steel value chain.

•Carbon Capture & Utilisation dovetailing in existing processes.

•Research on advanced materials.

•Collaboration with technology companies and academia.

In our UK operations, we continue to pursue control technologies to reduce our environmental footprint. At our site at Corby, Northamptonshire, we have announced a ?5 million investment in state of the art electric induction furnaces which will reduce emissions from one of our tube mills by at least 2,000 tonnes of COFF a year; the first part of our extensive plans to make the Corby site COFF neutral in line with Tata Steels declared environmental ambitions of becoming Net Zero globally by 2045.

The Shotton sustainability commitment, launched in 2022, builds on decades of e ort, uniting the activities already started and establishing these principles further within operations so that the Shotton site can provide a positive environmental legacy. The holistic approach to sustainability covers four key themes of sustainable development, giving a clear focus for all business decisions made today, and in the future:

1)Reducing the sites carbon footprint.

2)Developing and producing products and services that support sustainable construction.

3)Protecting and expanding the biodiversity that co-exists on the site.

4)Maximising material e ciency and achieving zero on-site waste.

In the coming years, TSN IJmuiden will transform into a green steel company running on green electricity and hydrogen, with lower local emissions. TSNs site in IJmuiden will undergo a complete transformation. In the future, todays primary steelmaking process will be completely replaced by green steel production using DRI (Direct Reduced Iron) and electric furnaces technology that runs on hydrogen. New facilities and electric furnaces will run on sustainable power sources like green hydrogen or green electricity instead of on coal. The blast furnaces and coke and gas plants will be taken offine, as well as the sinter lines, and no more blast-furnace gases will be supplied to the Vattenfall power stations. After additional measures, TSN IJmuiden will ultimately become a carbon-neutral steel production site with significantly reduced local emissions.

The green electricity needed for this can be generated in offshore wind farms in the North Sea and elsewhere. Part of the electricity needed for hydrogen production will be supplied from the North Sea, making it possible for a share of green hydrogen to be produced on site. Hydrogen will also be imported, for example from the hydrogen backbone. TSN will continue to be a leading steel company that produces high-quality steel, but in the sustainable manner that offtakers and the local community demand and expect. OFFtakers will use the green steel to realise the energy transition in other industries. TSN will continue to lead in expertise and development, and to be a major employer in the region. By ceasing the large-scale use of coal, some of TSNs site may be freed up for new industrial purposes, as well. l) Corporate Social Responsibility

Tata Steel Foundation is the primary implementing partner for the corporate social responsibility programmes and strategy of Tata Steel. It works directly on executing programmes in close collaboration with communities, public systems and partners. The Foundation envisions an enlightened, equitable society in which every individual realises his/her potential with dignity and works with tribal and excluded communities to co-create transformative, e cient and lasting solutions to their development challenges. This brings together the sociological and cultural context of geographies proximate to the operations of the Company, the core commitment of the Company to demonstrate leadership in addressing societal challenges and its deep experience in implementing societal change programmes.

In FY2022-23, CSR programmes directly touched the lives of over 3.15 million people from the most vulnerable sections of society, including initiatives that covered a post-COVID scenario of extending medical amenities to communities in need.

The Company focuses on signature themes which are large-scale proven change models addressing core development gaps in India, while being replicable at a global platform. They include programmes on health (maternal and child mortalities), education (access to school and learning enrichment) as well as holistic and comprehensive development of panchayats between the key manufacturing locations of Jamshedpur in Jharkhand and Kalinganagar in Odisha. Tata Steel continues to also be conscious of the specific nuances of tribal communities who form a significant proportion of the population in the operating geographies and at a larger pan-India level through the Samvaad ecosystem including its platforms – Tribal Leadership Programme, tribal languages, Samvaad Fellowship and Tribal Cuisine to name a few.

An equal emphasis is laid on regional change models enabling lasting betterment in the well-being of communities, prioritising those who are excluded and proximate, through extensive engagements on holistic, relevant themes - health, education, livelihoods, drinking water, infrastructure, sports, household nutrition, a life of dignity for Persons with Disabilities, efective grassroots governance, eliminating the worst forms of child labour and fostering a voice for women amongst communities. A carefully assorted set of programmes are activated in the peripheries of the operational locations of Tata Steel in India including Jharkhand, Odisha (including its manufacturing, mining and port locations, Uttar Pradesh (Sahibabad), Maharashtra (Khopoli) and the more recent spread to Punjab (Ludhiana).

During the year, the Tata Steel Foundation has spent 511 crore on CSR activities ( 480.62 crore from Tata Steel as its primary funder) which is 2.08% against the regulatory mandate of 2% of average net profit of the immediately preceding three financial years and a 17% increase against the commitment of FY2021-22.

2.Tata Steel Long Products Limited

FY2022-23 has been a year of strategic achievements for Tata Steel Long Products Limited (‘TSLP) despite multiple headwinds that the business faced. There had been several historic moments for TSLP towards its growth and transformational journey.

With the completion of acquisition of Neelachal Ispat Nigam Limited (‘NINL) in July 2022, crude steel capacity of the TSLP has almost doubled to ~1.9 MTPA level. NINL (a company which was not operational for >3 years) the operations were reignited within 3 months of acquisition with the start-up of the Blast Furnace. All the major facilities (except the Coke Oven) achieved stabilisation towards the end of FY2022-23. It has steadily ramped up its operations including iron ore mine and ended the year at 1 MTPA (Crude Steel + Pig Iron) rate in March 2023. It has produced 202 KT of crude steel in FY2022-23 and enabled TSLP to expand its product portfolio by leveraging Tata Tiscon Retail brand. System and processes have been put in place and strengthened as part of the Tata way of working. Newer set of benchmarks and milestones created by deeper engagement with all the stakeholders.

The turnover and profit/(loss) of TSLP consolidated for FY2022-23 are as follows:

FY 23

FY 22

Turnover 8,992 6,802
EBITDA (613) 1,288
Profit before tax (PBT), before
(2,536) 885
exceptional
Profit before tax (PBT) (2,538) 858
Profit after tax (PAT), before
(2,302) 657
exceptional
Profit after tax (PAT) (2,304) 630

The performance of NINL Business is included in FY2022-23.

The production and sales performance of TSLP (on a standalone basis) is given below:

(mn tonnes)

FY 23

FY 22

Change (%)

Crude steel 0.71 0.68 3
Saleable steel 0.71 0.67 6
Sales 0.66 0.65 -

The production and sales performance of NINL is given below:

(mn tonnes)

FY 23

FY 22

Change (%)

Crude steel 0.20 - N.A.
Saleable steel 0.17 - N.A.
Sales 0.17 - N.A.

Another big milestone of growth journey started with the ground-breaking ceremony for putting up the State of Art facility of 0.5 MTPA ‘Combi mill for speciality steel in Jamshedpur. The upcoming mill would deliver benchmark level of product quality parameters in terms of dimension tolerance, decarb level and surface defect to enhance presence and grow in chosen segments of Passenger Vehicle (‘PV) and 2-Wheelers (2W). The project has also been selected & approved by Ministry of Steel for Automotive Power train and Bearing steel as part of PLI (Production Linked Incentive) scheme for Speciality steel. The project is under full swing focusing on timely completion.

On the sustainability front, TSLP made certain bold moves to reduce COFF footprint. The prime focus area is transitioning towards green energy through multiple initiatives such as partial closure of one coal based captive power plant at Gamharia, maximising green power generation through waste heat recoveries and change in fuel combination to reduce fresh coal usage.

These initiatives coupled with increased throughput and reduced fuel consumption across mills have resulted in ~9% Y-o-Y reduction in COFF from 4.39 tons/ton of Crude Steel in FY2021-22 to 4.39 tons/tcs in FY2021-22 to ~4 tons/tcs in FY2022-23.

As part of the customer obsession journey, TSLP has undertaken several initiatives to improve relationship, product quality and new product development. Positive impact of the initiatives has got re ected in the customer satisfaction survey conducted by an independent agency. Customer satisfaction score for TSLP has significantly improved to 85.4% in 2022 from 79.4% in 2020 and largely bridged the gap with respect to the competition. On the operations front, TSLP has first time crossed the landmark of 700 KT+ of crude steel production and achieved highest ever speciality steel deliveries of 536 KT in FY2022-23 registering a growth of ~10% on Y-o-Y basis. TSLP has also achieved best-ever DRI production from Gamharia unit at 463 KT (~18% growth on Y-o-Y basis).

Continuing with its journey on integration, TSLP has migrated on S4 Hana across all three operating locations to have enterprise-wide single ERP (Enterprise Resource Planning) system.

The prolonged geopolitical instability in the form of Russia-Ukraine war resulted in heightened in ationary pressure in the post-COVID world. Central banks across the world increased interest rates. Zero COVID policy and collapse of property market in China, energy crisis, export duty imposition on steel and iron ore by Indian Government further impacted the market sentiments. FY2022-23 saw volatility in the raw material and steel prices during the year like never before which is re ected in the quarterly results of the most steel companies and TSLP had been no exception to this. Accordingly, TSLPs financial performance for FY2022-23 had been a year of two halves. H1 FY2022-23 struggled on high priced coal consumption followed by downward spiral of prices post imposition of export duty in the month of May 2022 by the Government of India. In addition, the power availability from grid and certain disturbances at Blast Furnace impacted the operational performance. TSLP has demonstrated agility and re-aligned its supply chain to minimise the impact of coal prices and logistics disturbances in the marketplace. In H2 FY2022-23, TSLPs financial performance bounced back driven by operational excellence and mix enrichment. TSLP has changed Joda business model on conversion with Tata Steel to optimise its working capital requirement. EBITDA loss of H1 FY2022-23 got fully negated in Q3 FY2022-23 and TSLP has achieved positive underlying PBT (without considering the interest burden on the NCRPS) in Q4 FY2022-23. TSLP has remained resilient throughout the year and seamlessly managed cash flows thereby averting need of any fresh borrowing.

TSLPs e orts are getting recognised at various forums on multiple fronts. TSLP has bagged the Outstanding accomplishment in Corporate Excellence award from CII. The assessment happened across 250 sustainability indicators out of which >70% parameters re ect TSLPs strength area. The rest have been identified as opportunity for improvement for TSLP. TSLP has received a prestigious award that is first amongst Tata Group; as winner for excellence in wellness initiatives from SHRM (Society of Human Resource Management). TSLP is striving towards making the organisation free from lifestyle diseases. In addition, TSLP has received other key awards as listed below:

Safety & Sustainability

•Steel Champion in Energy Excellence from CII.

•Kalinga Safety Excellence Award in ‘Best Practices on behavioral & Workplace Safety.

•Eastern Region 2nd Runner up for ‘Best performance in employee health, safety & environmental care.

Customer Engagement

•Best performance in Steel Quality from Mahindra CIE Group vendor conference 2022.

•Best Supplier of CHQ (Cold Headed Quality) Steel wire rods from M/s Micron Precision Screws, Rohtak.

People Management

•Future of Learning & Development (L&D) Summit

& Awards 2022 – Winner in L&D Excellence Award Category.

•AIMA (All India Management Association) Project Excellence Award 1st Runner Up for Best CSR (Corporate Social Responsibility) projects.

During the FY2022-23, TSLP, on a consolidated basis had produced 893 KT of sponge iron (including 156 KT conversion for TSL) and 910 KT of steel as against 839 KT of sponge iron and 684 KT of steel in FY2021-22. Deliveries of FY2022-23 for sponge iron was 648 KT (including 151 KT conversion for TSL) as against 594 KT of FY2021-22. Steel deliveries was

822 KT as against 639 KT of FY2021-22 contributed by NINL acquisition. The turnover of FY2022-23 had increased over FY2021-22 by 2,190 crore primarily due to acquisition of NINL during the year along with higher average net realisation of steel and sponge iron. The loss after tax of FY2022-23 at 2,304 crore was higher against a profit of 630 crore in FY2021-22 primarily due to decline in operating profit due to higher input costs, higher ramp-up expenses at NINL and increase in depreciation charge and nance cost post NINL acquisition.

3.Tata Steel Europe (TSE)

Economic growth decelerated globally in 2022. Economic activity was impacted by the rise of central bank rates to ght in ation, the war in Ukraine and the spread of COVID-19 in China. In ation was at 7.8%, significantly above levels seen in previous years (2.9% in 2016-2020). In China, GDP growth increased by 3.0% (2021: 8.5%). The deceleration was mainly due to the lockdowns as a result of COVID-19 outbreaks which impacted consumer spending and industrial output, and a slowdown of real estate. Lower economic growth in China led to reduced global trade growth and lower global commodity prices. The EU economy decelerated to 3.6% (2021: 5.3%) and the UK economy to 4.0% (2021: 7.6%). The EU and UK economy remained resilient due to the strong contribution from the services sector and overall positive developments over the first half of the year. In the second part of the year consumer con dence and business sentiment worsened as the central banks started to increase interest rates. Global steel demand decreased by 3.2% in 2022 in line with the worsening macroeconomic conditions (2021: 2.8% growth). Demand in China decreased by 3.5% (2021: 5.4%) as output in the real estate sector declined. New construction started declining by 36% for the year. Demand in the EU28 decreased by 8.0% (2021: 18.1% growth). Output growth in the steel-using-sectors was positive in 2022 due to strong output in the first half of the year. However, apparent demand for the full year declined strongly due to a significant destock, especially during the latter part of the year. The destock was triggered by lower business con dence caused by high energy prices and in ation, as well as the deterioration of the economic outlook. In 2022, global steel production decreased by 4.7% (2021: 3.9% growth). Steel production in China decreased by 2.6% (2021: 2.9%) and equated to 55% of global steel production. In the EU, production decreased by 10.8% (2021: 15.6% growth) as ~20% of EU blast furnaces were idled in response to lower demand for steel.

The market reference price for iron ore nes (China CFR 62%) decreased in 2022 to ~US$120/t (-$39/t). The price declined because there was lower demand for iron ore due to the reduction of output by blast furnaces globally. The hard coking coal spot price (Australia FOB) increased to US$365/t (+$141/t). The price was at an all-time high of US$594/t in March 2022 due to the loss of supply from Russia as a result of the war in the Ukraine. The German benchmark scrap price (Sorte 2/8) increased to €414/t (+€16/t) compared to the previous calendar year. The price of COFF increased in 2022 to €81/t (+€28/t), reaching an all-time high in February 2022 at €91/t. Reforms of the EU and UK Emissions Trading System, reducing the supply of permits, are causing the price to rise.

The European steel spot Hot Rolled Coil price (Germany, parity point) decreased in 2022 to €930/t (-€44/t). In April 2022 the steel price was at an all-time high of €1,385/t due to the loss of supply from Ukraine and Russia. In the later part of the year the price reduced strongly as apparent demand for steel reduced significantly.

For 2023, the outlook for the EU and UK economy is that growth will be low (+0.5% for the EU and 0.0% for the UK). Monetary policy tightening is expected to have a negative impact on growth. Output in construction and machinery is expected to decline whilst automotive is expected to grow slightly. Apparent demand for steel in the EU is expected to continue to decline by 1.6%. Downside risks to these forecasts are higher than expected in ation, the lagged e ect of monetary tightening and unexpected developments in geopolitics. The turnover and profit/(loss) figures of TSE are given below:

(Rs. crore)

FY 23

FY 22

Turnover 90,300 90,023
EBITDA 4,632 12,164
Profit before tax (PBT), before
1,103 8,362
exceptional
Profit before tax (PBT) 1,304 8,114
Profit after tax (PAT), before
(3,464) 9,235
exceptional
Profit after tax (PAT) (3,263) 8,986

The production and sales performance of TSE (continuing operations) is given below:

(mn tonnes)

FY 23

FY 22

Change (%)

Liquid steel production 9.35 10.11 (8)
Deliveries 8.16 9.02 (10)

TSEs deliveries decreased by ~10% over the previous year due to low demand from the market in the second half of the year following the general economic slowdown in Europe. This lower demand also contributed to production in FY2022-23 decreasing by 0.76 MnT (8%) compared to the previous year although production was not as low as deliveries due to a build-up of inventory in TSN in order to support operations during an extended outage for the Blast Furnace 6 reline at the start of FY2023-24.

During the year under review, the revenue stood at 90,300 crore which was marginally higher than FY2021-22. However, in GBP terms, revenue increased by 5% due to improved average revenue per tonne which more than offset the lower deliveries. TSE reported EBITDA of 4,632 crore during FY2022-23 lower than the EBITDA of 12,164 crore during FY2021-22. This re ected contrasting EBITDA performance between the first and second half of the year with the first half benefitting from exceptionally high selling prices resulting in record EBITDA performance. The second half however, experienced a reduction in selling prices due to lower market demand following the economic slowdown in Europe although raw material and energy costs remained high which resulted in EBITDA losses. A higher non cash deferred tax charge due to actuarial movements on the British Steel Pension Scheme following a number of transactions whereby the Scheme purchased insurance policies to de-risk the pension liabilities, led to a loss after tax of 3,263 crore in FY2022-23 against a profit of 8,986 crore in FY2021-22. Tata Steel Netherlands (‘TSN) – Liquid steel production at IJmuiden Steel Works, Netherlands during FY2022-23 at 6.3 MT was 0.28 MT lower than the previous year re ecting the weakening of the market during H2 FY2021-22 after a strong start earlier in the financial year. During FY2022-23, TSN continued with the Transformation Programme (rebranded into ‘sustainable profit programme) which is targeting improvements to delivery and yield performance, commercial mix, and reducing operating costs and unplanned downtime.

Further progress was also achieved in its ‘Strategic Asset Roadmap (STAR) capital investment programme to support the strategic growth of di erentiated, high value products in the automotive, lifting and excavating, and energy and power market sectors. Most noticeably, projects in the Hot Strip Mill, Cold Mill 21 and Galvanising line 3 were delivered. However, the start-up of the CM21 project took much longer than expected leading to supply issues to our customers.

The Blast Furnace 6 reline started at the end of March 2023 and will take approximately 4 to 5 months. Supplies to customers will not be a ected as a slab stock has been build up to feed the rolling mills.

Furthermore, significant progress was achieved regarding the ‘Roadmap+, which contains a series of measures to eliminate the environmental impact (noise, dust, odour) of the IJmuiden Steel Works.

In September 2021, TSN announced its decision to accelerate its transition from coal-based steelmaking to hydrogen-based steelmaking at its IJmuiden site. During the year under review, activities to pursue our ambition continued. In July 2022, TSN and government bodies entered into an amended and restated joint ‘Expression of Principles, outlining our shared ambition to transform TSN into a clean, green and circular steel producer. In August 2022, selected partners were contracted for engineering activities while a team of >100 FTE is working on the transition.

TSN is working with its customers towards a zero carbon emission, circular world. To support the joint short-term ambitions, TSN launched Zeremis Carbon Lite in the summer of 2022, through which green steel is offered to the market. The lower COFF intensity is based on COFF savings realised within TSN since 2018 and is certi ed by independent assurance expert DNV.

Tata Steel UK (‘TSUK) – Liquid steel production at Port Talbot Steel Works, Wales during FY2022-23 at 3.02 MnT was 0.47 MnT lower than the previous year mainly due to lower market demand in the second half of the year. During FY2022-23, TSUK undertook a significant maintenance programme focused on its steelmaking assets in Port Talbot in order to improve operational stability. This included a successful installation of a new charger crane in the steel plant, refurbishment of the Blast Furnace stoves and the first phase of the replacement of the teeming ladle eet. Given the high energy costs in Europe, TSUK focused on improving energy e ciency measures which included a peak internal power generation of 100 MwE and optimisation of energy consumption rates on the reheat furnaces in the Hot Strip Mill.

During the year, the Transformation programme continued to deliver benefits with an improvement of ?52m compared to FY2021-22 mainly re ecting lower cost to produce slab and the optimisation of product value streams across the whole UK Value Chain. In response to the deteriorating financial performance in the second half of FY2022-23 caused by the weaker economic conditions, TSUK launched a new cost saving initiative ‘Drive to Save in order to reduce spend levels and ensure that the business has a strong focus on cash.

During the year, two further insurance transactions (~GBP 4.4bn) were completed between the British Steel Pension Scheme (‘BSPS) and Legal & General taking the proportion of liabilities insured to c. 60%. A nal insurance transaction is expected to complete in the early part of FY2023-24 after which the BSPS will be fully de-risked. In TSUK, 12 new products were launched during the year, which exceeded the annual target. These launches cover a wide range of high value products and end applications for automotive, engineering, renewables and construction markets for both the UK and export opportunities. Some key launches have been in the construction market including the launch of new off-site manufactured construction solutions with Catnic Matrix and Trimawall Fast-Fit, which enable quicker, safer and standardised onsite construction. In the renewables sector, TSUK launched Magizinc? for Solar S450 product with its 25-year guarantee and, for export, TSUKs Hot Rolled Dry specifications are now certi ed to ASTM standards to enable these products to be used across the NAFTA region.

During FY2022-23, TSUK took the landmark step, working in partnership with TSN, to launch its first low COFF steel products. This means that TSUK can now offer to the market a scope 3 emissions reduction, using a mass balanced approach through a carbon in-setting scheme called Carbon Lite. Under the scheme Tata Steel has committed to reinvest all revenues from Carbon Lite certi cates to further drive our de-carbonisation journeys of Optemis for Tata Steel UK and Zeremis for Tata Steel Netherlands.

4.Tata Steel Thailand (TSTH)

During FY2022-23, the demand for steel in Thailand was at 16.4 MnT, decreased by 12.2% from the previous year. Import volume was 10.8 MnT, at 66% of the demand for steel in Thailand, dropped by 13.1% Y-o-Y.

Demand for long products in Thailand was 6.2 MnT declined by 5.1% Y-o-Y. Import volumes was 2.5 MnT (41% of the total long products demand in Thailand), which was down by 4.2% Y-o-Y.

The turnover and profit/(loss) of TSTH for FY2022-23 are as follows:

(Rs. crore)

FY 23

FY 22

Turnover 6,992 7,431
EBITDA 239 736
Profit before tax (PBT), before
166 611
exceptional
Profit before tax (PBT) 155 593
Profit after tax (PAT), before
167 612
exceptional
Profit after tax (PAT) 156 594

The production and sales performance of TSTH is given below:

(MnT)

FY 23

FY 22

Change (%)

Saleable steel 1.20 1.29 (7)
Sales 1.21 1.33 (9)

During FY2022-23, the saleable steel production decreased by 0.09 MnT and sales declined by 0.12 MnT over FY2021-22. The turnover decreased by 440 crore primarily due to sluggish demand for retail in domestic market. The profit after tax was lower by 438 crore on account of lower operating profits, offset by lower nance cost and lower exceptional charge.

Key Business Highlights

•Tata Business Excellence Model (TBEM) assessment score improved from 559 points (previous assessment in 2018) to 578 points which is the category of ‘Emerging Industry Leader.

•Dividend payout after 14 years (FY2021-22 results).

•Modi ed machine to produce 18m length rebar for Canada.

•Stabilised quality of wire rod for small diameter (0.28mm) tire cord product.

•Co-branding with B2B customer for sustainable construction solutions with using Cut and Bend in the project (SC asset developer).

Recognitions

•TSTH received ‘Thailand Sustainability Investment (THSI) 2022 from The Stock Exchange of Thailand.

•TSTH received ‘Sustainability Disclosure Award 2022 from Thaipat Institute.

•TSTH has been selected as one of the ‘ESG100 Securities Group Companies from Thaipat Institute.

•SCSC received ‘Prime Ministers Industry Award 2022 in Circular Economy Category from Ministry of Industry.

5.The Siam Industrial Wire Co. Ltd. (SIW) & TSN Wires Co. Ltd. (TSN Wires)

T S Global Holdings (TSGH) Singapore, a 100% indirect subsidiary of Tata Steel Limited, had divested its equity stake in NSH to a Singapore based steel and iron ore trading company for an Equity Value of 1,275 crore. The wires business of NatSteel in Thailand (Siam Industrial wires) has been retained by the Company as part of the downstream wires portfolio. The transaction was completed on September 30, 2021.

SIW serves the B2B Construction industry in Thailand and around the World with its Steel Wires for concrete reinforcement applications. TSN Wires serves the Fencing, Poultry, Farming, Paper and other related segments with its Galvanised Wires. FY2022-23 presented many di cult challenges like the resurgence of COVID-19, the Ukraine war, high in ation and high energy costs, fluctuations in currency and steel prices, severe ooding in Thailand and significant slowdown of the Chinese economy. As a result, this had a severe impact on the Thai Construction demand and also on the other consumer facing sectors.

The turnover and profit/(loss) of SIW for FY2022-23 are as follows:

(Rs. crore)
FY 23

FY 22

Turnover 1,930 1,972
EBITDA 235 228
Profit before tax (PBT) 190 242
Profit after tax (PAT) 159 211

The production and sales performance of SIW is given below:

(mn tonnes)

FY 23

FY 22

Change (%)

Saleable steel 0.20 0.22 (12)
Sales 0.16 0.17 (5)

The turnover and profit/(loss) of TSN Wires for FY2022-23 are as follows:

(Rs. crore)

FY 23

FY 22

Turnover 267 325
EBITDA 0 23
Profit before tax (PBT) (14) 10
Profit after tax (PAT) (14) 10

The production and sales performance of TSN Wires is given below:

(mn tonnes)

FY 23

FY 22

Change (%)

Saleable steel 0.03 0.04 (16)
Sales 0.03 0.04 (21)

During FY2022-23 the combined saleable steel production (SIW & TSN Wires) decreased by 0.03 MnT and sales declined by 0.02 MnT over FY2021-22 attributable to subdued demand. The combined turnover decreased by 4% primarily due to lower deliveries owing to decline in demand. The profit after tax declined on account of lower operating profits, and higher exceptional charge against a gain in previous year on account of impairment of investment (eliminated on consolidation).

Key Business Highlights

•Secured the biggest PC Strand market in USA in 2022 with a 23% import share.

•Initiated the homologation process in Italy, Netherlands and Germany for greater market access in Western Europe.

Recognitions

•SIW achieved certi cation of Low Emission Support Scheme (‘LESS) by Thailand Greenhouse Gas Management Organization (‘TGO) on reducing GHG emission.

•SIW received Green Industry Level 4 from the Ministry of Industry, Thailand.

•SIW received Corporate Social Responsibility Continuous Award (CSR – DIW Continuous Award). The award is for the 14th consecutive year from the Department of Industrial Works, Ministry of Industry, Thailand.

•SIW & TSN Wires received Outstanding Award for Safety, Occupational Health and Work Environment from Occupational Safety and Health Bureau, Department of Labor Protection and Welfare, Ministry of Labour, Thailand.

6.Tata Metaliks Limited

Tata Metaliks Limited (‘TML) has its manufacturing plant at Kharagpur, West Bengal, India, which produces annually 250 KT of Pig Iron (‘PI) and 350 KT of Ductile Iron Pipes

(‘DIP). Pig iron is marketed under the brand name Tata eFee and ductile iron pipe as Tata Ductura.

The PI demand throughout the year remained subdued with downward corrections in prices. Overall buying sentiments were weak on the face of price volatility of raw materials, with foundries operating at a maximum 50-60% capacity levels. PI exports saw upsurge in Q1 FY2022-23 and reached an estimated 190 KT compared to 88 KT in Q4 FY2021-22. However, price corrections and imposition of export duty on PI depressed exports significantly from June 2022. Prices dropped by ~$140/t on FoB east coast India basis. Exports were negligible till Q3 FY2022-23. Even after removal of Export duty in mid-November, the export market remained dull resulting in over-supply in the domestic market. Only in the last quarter of FY2022-23, bulk PI booking for export commenced, though it is yet to reach the pre-export duty imposition levels. On the price front, domestic foundry grade PI prices kept correcting itself downwards throughout the year. By H1 FY2022-23 it was lower by ~ 8k-12k/t compared to Q4 FY2022-23 and by the end of the year it was lower by ~ 4,000/t from H1 FY2022-23.

The DIP segment, after peaking in Q4 FY2022-23 at ~580 KT, the industry witnessed a drop in dispatches by ~30% in Q1 FY2022-23 due to planned maintenance shutdowns and slower release of orders and clearances. By end of H1 FY2022-23 situation improved and by the last quarter of FY2022-23 dispatches witnessed improvement by ~11% over Q3. This was due to year-end target ful lment for all the departments and contractors and Government pressure to utilise the available fund with the respective authorities within the financial year. Export bookings in the first quarter remained healthy in April & May but slowed down in June till end of H1 because customers anticipated drop in DIP prices. Export bookings remained healthy thereafter till the end of the year. On the price front, after witnessing an upward movement of ~50% in Q4 FY2022-23 over Q3 prices, it started to soften throughout H1 FY2022-23 and reached levels same as Q4 FY2022-23. It started to strengthen in Q3 FY2022-23 and by the last quarter market witnessed upswing in price of ~50-55%.

Key Business Highlights

The Company successfully commissioned new DI Pipe plant at Kharagpur to take its DI Pipe plant capacity to

4 LTPA. The first phase of expansion had a vertical ramp-up and the second phase is under way.

Digitisation and automation: TML started its digital transformation journey in FY2018-19 and developed a Long-term Digital Strategy Roadmap that focused on three themes: Real-time data analytics, Smart machines and Business on Mobile. In FY2022-23, TML took some key strategic initiatives such as (a) Project ARUNA, to drive EBITDA improvement data analytics projects across the organisation and (b) Implementation of Robotics based automation in DIP plants. The new DIP plant with high level of Automation, Mechanisation and Digitalisation got commissioned and started operating. This plant has many firsts in DIP industry in the country such as fully automated core shop with Automated Stacking and Retrieval System (ASRS) system. In addition, the plant will have over 20 robots to reduce human machine interface and improve workforce productivity. TML strengthened its capability in area of robotics and developed in-house robotics solutions which are being implemented for the first time in DIP industry in the country.

The turnover and profit/(loss) figures of TML for FY2022-23 are as follows:

(Rs. crore)

FY 23

FY 22

Turnover 3,260 2,746
Profit before tax (PBT) 101 339
Profit after tax (PAT) 81 237

During FY2022-23, the production of PI and DIP was 270 KT and 300 KT respectively as against 344 KT and 235 KT respectively in FY2021-22. Deliveries of PI and DIP in FY2022-23 was 262 KT and 296 KT respectively as against 341 KT and 237 KT respectively in the previous year. The turnover during FY2022-23 at 3,260 crore, was higher by 514 crore over previous year primarily due to higher prices of pig iron and DI pipes along with higher deliveries of DI pipes. The profit after tax during FY2022-23 at 81 crore, was lower by 157 crore over previous year due to lower operating profits attributable to higher input costs primarily coal along with higher nance cost and depreciation charge. Moreover, previous year included an exceptional gain of 31 crore on account of sale of land which is not present in current year.

Recognition

•Awarded ‘Green Co Gold in Green Co Assessment by CII – Sohrabji Godrej Green Business Centre.

•Received ‘CAP Oriented Award under the Climate Action Plan (CAP) assessment conducted by CII.

•Adjudged as the 2nd Runners-Up at CII Energy Conservation Award 2022.

•Declared Winner under the Listed Medium Category at the ‘Corporate Governance Recognition 2022 - organised by BCCI.

7.The Tinplate Company of India Limited

The Tinplate Company of India Limited (TCIL) is the largest indigenous producer of tin-coated and tin free steel in India which is used for metal packaging. TCIL has also been ‘value-adding its products by way of providing printing and lacquering facility to reach closer to food processors/ llers. TCIL has two Cold Rolling Mills and two electrolytic tinning lines with an installed annual production capacity of around 379 KT of tinplate and tin free steel with ~100% capacity utilisation. With growing demand for tinplate driven by rising urbanisation and penetration of organised retails, TCIL has planned to expand its capacity by additional 3,00,000 MTPA at the existing location in the next few years.

The turnover and profit/(loss) figures of TCIL for FY2022-23 are as follows:

(Rs. crore)

FY 23

FY 22

Turnover 3,983 4,272
Profit before tax (PBT) 193 471
Profit after tax (PAT) 143 353

During FY2022-23, the production at 362 KT, was marginally lower over FY2021-22 by 12 KT and deliveries at 362 KT, were also lower by 11 KT over the previous year, primarily due to decline in demand and planned shut-down during the year. The turnover during FY2022-23 at 3,983 crore lower by 289 crore over previous year on account of decrease in average realisation along with lower deliveries. Profit after tax during FY2022-23 was 143 crore, lower by 210 crore over previous year due to lower operating profit partly attributable to decrease in realisations and higher input costs offset by higher nance income.

Key Business Highlights

•Execution of critical capital projects like Offline induction re ow system at both Electrolytic Tinning Lines (‘ETLs), upgradation of pin hole detectors for both ETLs, upgradation of helper rolls drives & motors at ETL2, installation of secondary scrapping system at printing line-1.

•The collaborative work with Tata Steel Europe (‘TSE) and Tata Steel Jamshedpur (‘TSJ) continued leading improvement in product quality attributes and consumption efficiency improvement in Tin and Mill Rolls.

•The Environment Clearance related to the Growth plan has also been received and a dedicated team had been working on technical specifications of major packages, which have now reached nal discussion stage with suitable vendors.

•TCIL achieved its highest ever capitalisation of over 100 crore in FY2022-23.

Recognition

•TCIL was recognised as the ‘Fastest Growing Organization in the category of > 1,500 crore annual turnover at the Economic Times Corporate Awards 2023 at Kolkata.

•TCIL received the ‘Happiest Workplaces Award at Delhi at the Business World People Awards 2023.

8.Tata Steel Downstream Products Limited

Tata Steel Downstream Products Limited (TSDPL)

(formerly Tata Steel Processing and Distribution Limited) is a leader in the organised Steel Service Centre business in India. TSDPL has a pan India presence with 10 steel processing plants and 13 distribution and sales locations. Value-added offerings of TSDPL include slitting, cut-to-length, blanking, corrugation, plate burning, fabrication, component manufacturing and steel intensive products and applications. TSDPLs products and services conform to world class quality standards in meeting customers demand. Its entire operations including supply chain runs on a state-of-the-art ERP (Enterprise Resource Planning) system.

Key Business Highlights

•Implementation of IT / Digital initiative Under OTON (One Tata Operating Network) programme.

•During the year under review, TSDPL continues with the EBITDA improvement initiative ‘Lakshya 25 towards achieving operational e ciency and improvement in cost eFectiveness resulting in significant savings in cost.

•Oracle HCM, for Human Capital Management, People Strong for Payroll Management, iValua for Materials Management / Procurement, Happay for Expense and Travel management, Anaplan for Planning and Budgeting.

The turnover and profit/(loss) figures of TSDPL for FY2022-23 are as follows:

(Rs.crore)

FY 23

FY 22

Turnover 7,394 6,805
Profit before tax (PBT) 294 194
Profit after tax (PAT) 246 144

During the year under review, TSDPL processed around 3.4 MnT – its highest ever dispatch. TSDPL has also delivered the best ever Rs.nancial performance in its history with the highest ever turnover of Rs.7,394 crore and the highest ever EBITDA of Rs.363 crore.

During the year under review, the production and deliveries from tolling business were at 2,422 KT, higher by 157 KT than the previous year and for distribution business, the production was at 1,048 KT, higher by 158 KT over FY2021-22 and the deliveries of distribution business stood at 1,007 KT which was higher by 113 KT attributable to the improvement in the demand. Turnover was higher by Rs.588 crore mainly supported by higher sales volume. ProRs.t after tax was higher by Rs.103 crore due to higher operating proRs.ts which was primarily due to a dividend income from an aRs.liate.

TSDPL intends to set up a Steel Service Center at Sanand, Gujarat (West) to service customers in the western market. TSDPL also plans to foray into processing steel for Pravesh initiative. Further, several upgrades are planned for the existing plants to enhance the overall processing capacities. TSDPL also aims to enter the Steel Recycling business.

Recognition

TSDPL Pune unit bagged Greenco Platinum Award: Rs.rst in the Indian Steel Industry.

9. Bhubaneshwar Power Private Limited

Un-interrupted power supply and cost of power is a challenge for large power intensive process industries. Industries which produce 365 days per annum, continue to depend on thermal power plants for their base load requirements.

Bhubaneshwar Power Private Limited (BPPL) is in the business of generation of power. It owns 135 MW (2x67.5 MW) coal based power plant in Odisha. BPPL supplies 120.5 MW power to Tata Steel and Tata Steel Mining Limited.

During the year under review, BPPL has used primary coal from Mahanadi CoalRs.eld Ltd. (MCL) at higher rate since the coal demand & spot auction price during FY2022-23 were higher compared to last year. Power Generation was lower compared to last year due to lower oRs.take by the customers.

The turnover and profit/(loss) figures of BPPL for FY2022-23 are as follows:

(Rs. crore)
FY 23

FY 22

Turnover 597 516
Profit before tax (PBT) 59 52
Profit after tax (PAT) 45 39

During FY2022-23, the turnover was 597 crore, higher by 81 crore over previous year primarily due to higher energy charges attributable to increase in coal prices. The profit after tax during FY2022-23 was at 45 crore, which was higher by 6 crore over previous year primarily due to lower net nance cost.

Recognition

Received Kalinga Environmental Excellence Award (5 Star Category) for ‘Excellence in Environmental performance in Odisha at the 7th National Seminar on Sustainable Environment & Climate Change 2022.

10. Tata Steel Mining Limited

Tata Steel Mining Limited (TSML) is in the merchant mining business and have long term mining leases of three chromite mines viz. Sukinda, Saruabil and Kamarda in Jajpur district, Odisha. Apart from this, TSML has won the bid for Gandhalpada Iron Ore Block, which is in the stage of various statutory clearances. TSML serves the requirements of both domestic & overseas stainless steel producers. With the acquisition of erstwhile company Rohit Ferro-Tech Limited, TSML has increased its capacity of Ferro Chrome production by 1,00,000 MT. Besides addition of Ferro Chrome capacity, TSML is ramping up for Stainless Steel Production at its Bishnupur facilities.

Key Business Highlights

•Scaled up ferro chrome production to 389 KT in FY2022-23 from 373 KT in FY2021-22.

•Implementation of e-Logistics process to automate despatch at Mines.

•Implementation of e-Sales process to automate order booking and display details to customers.

•TSML has signed an agreement with GAIL for supply of Natural Gas for replacement of Furnace Oil used in Briquetting Operations. This will lead to reduction in carbon emissions to the tune of 1,000 tonnes of COFF equivalent/year.

The turnover and profit/(loss) figures of TSML for FY2022-23 are as follows:

(Rs. crore)
FY 23

FY 22

Turnover 5,000 4,605
Profit before tax (PBT) (270) (1,131)
Profit after tax (PAT) (272) (883)

During FY2022-23, the turnover was 5,000 crore (previous year 4,605 crore) which increased owing to higher volumes and prices of ferro chrome. During FY2022-23, TSML reported lower loss after tax amounting to 272 crore as against loss of 883 crore in previous year as previous year included provision for low grade inventory having no market value along with higher provisions for royalties as per Mine Development and Production Agreement (MDPA).

Recognition

•TSML has received the prestigious Responsible Chromium recognition from the International Chromium Development Association (ICDA) and became the first Indian mining company to receive this prestigious international recognition.

•Odisha State Productivity Council awarded 5 Star rating in Productivity Excellence Award 2022 for Team Environment and 4 Star rating in Productivity Excellence Award-2022 for Team FAP-Gopalpur.

•TSML received recognition of Excellence in Biodiversity by Jury of CII-ITC Sustainability Awards 2022.

•Sukinda Chromite mine and FAP Gopalpur have bagged CII state level awards for SHE.

•TSML has been bestowed with Kalinga Environment Excellence Award.

11. Tata Steel Minerals Canada

Tata Steel Minerals Canada (TSMC) is a partnership between Tata Steel (82%) and the Government of Quebec (18%). At TSMC, we mine and process high-grade iron ore from our multiple isolated hematite deposits occurring over 30 km in the Menihek region of Labrador and northern Quebec, near Sche erville, and containing from < 1 MnT to 50 MnT of high-grade ore. Fines for sintering and super ne material from our bene ciation plant are produced with a minimum iron content of 64% Fe while our DSO (Direct Shipping Ore) facilities crush, screen and dry 60%-62% Fe iron ore for direct shipping. Our product is railed to Sept-?les (a city in Canada) for shipping to our customers worldwide.

The iron ore market remained stressed in FY2022-23. Iron ore prices continued to fall from U$ 137 per dry metric tons (CFR) in Q1 to U$ 101 per dry metric tons in Q2. This coupled with increase in energy prices for diesel from, significantly impacted TSMCs performance. TSMC had decided to shut-down the plant for winter maintenance starting November 2022 with aim to restrict the losses. With improving iron ore prices in Q4 and a positive outlook of improving prices, the plant resumed operations towards the end of February 2023.

The turnover and profit/(loss) figures of TSMC for FY2022-23 are as follows:

(Rs.crore)

FY 23

FY 22

Turnover 649 739
Profit before tax (PBT) (1,086) (815)
Profit after tax (PAT) (1,086) (815)

During FY2022-23, the turnover was 649 crore significantly lower over previous year by 91 crore (12%) owing to lower volumes and prices. During FY2022-23 reported loss before tax amounting to 1,086 crore as against loss of 815 crore in previous year primarily on account of lower operating profits and higher nance cost during the year.

12. Creative Port Development Private Limited

Creative Port Development Private Limited (CPDPL) is in possession of a 54 years concession (initial 34 years which is extendable for two terms of 10 years each) from the Government of Odisha for development of a Greenfield Seaport at Chaumukh Village, in Balasore District, Odisha on a ‘BOOST basis (Build, Own, Operate, Share & Transfer). CPDPL is availing this concession through a Special Purpose Company ‘Subarnarekha Port Private Limited and is in possession of all the statutory approvals for the project. In Phase – 1, the port will have an initial capacity of 25 MnT with a potential to expand to 150 MnT. CPDPL is already in possession of the port land and is in the advanced stage of getting the required land for railway corridor and construction of access road.

During the year under review, CPDPL has made substantial progress in private land acquisition, completed the oceanographic & geo technical survey for dredging and reclamation plan, obtained certain approvals for commencement of port construction and made substantial progress on its CSR intervention plan.

V. FINANCIAL PERFORMANCE

1.Tata Steel Limited (Standalone)

During FY2022-23, the Company recorded a profit after tax of 15,495 crore (previous year 33,011 crore). The decrease is primarily on account of reduction in realisations along with higher cost of production due to increase in raw material prices mainly of coking coal. Higher nance cost due to additional loans taken during the year, along with higher exceptional loss as compared to the previous year, which was partly offset by higher interest income on investments and loans to group companies. The basic and diluted earnings for the FY2022-23 were at 12.68 per share and 12.67 per share respectively (previous year: basic and diluted: 27.03 per share and 27.01 per share respectively). The analysis of major items of the financial statements is given below: a) Revenue from operations

(Rs. crore)

FY 23

FY 22

Change (%)

Sale of products 1,25,565 1,26,070 (0)
Sale of power and water 1,902 1,611 18
Other operating revenue 1,540 1,340 15
Total revenue from
1,29,007 1,29,021 (0)
operations

During the year under review, sale of products was marginally lower as compared to that of the previous year, primarily due to decrease in realisations in domestic as well as export markets partly offset by higher deliveries. Sale of power and water increased due to higher demand and prices. Increase in other operating income was primarily on account of conversion income at FAMD. b) Purchases of stock-in-trade

(Rs. crore)

FY 23

FY 22

Change (%)

Purchases of
7,467 4,089 83
stock-in-trade

During the year under review, Purchases of stock-in-trade was significantly higher as compared to the previous financial year primarily due to higher purchase of rebars from group companies for trading along with higher scrap purchases for reducing carbon emissions including higher scrap prices. Purchases also increased at other sustainable businesses.

c) Cost of materials consumed

(Rs. crore)

FY 23

FY 22

Change (%)

Cost of materials
54,012 35,257 53
consumed

During the year under review, cost of materials consumed increased significantly primarily due to significant increase in imported coking coal prices, along with other raw materials due to higher prices and increase in production during the year. d) Employee benefits expense

(Rs. crore)

FY 23

FY 22

Change (%)

Employee benefits
6,616 6,366 4
expense

During the year under review, the employee benefits expense increased primarily due to salary revisions and its consequential impact on retirement provisions. e) Depreciation and amortisation expense

(Rs. crore)

FY 23

FY 22

Change (%)

Depreciation and
5,435 5,464 (1)
amortisation expense

The depreciation charge during the year is at par with the previous year as the lower charge for assets fully depreciated during the year was offset by additions during the year. f) Other expenses

(Rs. crore)

FY 23

FY 22

Change (%)

Other expenses 34,352 34,001 1

Other expenditure represents the following expenditure:

(Rs. crore)

FY 23

FY 22

Change (%)

Consumption of stores

9,658

6,960 39
and spares
Repairs to buildings

42

47 (11)
Repairs to machinery

4,956

3,973 25
Relining expenses

232

204 14
Fuel oil consumed

530

377 41
Purchase of power

5,346

4,286 25
Conversion charges

2,271

1,798 26
Freight and handling

6,606

6,632 (0)
charges
Rent

88

86 3
Royalty

3,783

5,506 (31)
Rates and taxes

1,520

2,066 (26)
Insurance charges

228

203 13
FY 23

FY 22

Change (%)

Commission, discounts

290

288

1

and rebates

Allowance for credit losses/

(6)

63

(110)

provision for advances

Other expenses

3,327

3,970

(16)

Less :-Expenditure (other

than interest) transferred

(4,519)

(2,458)

84

to capital & other accounts

Total Other expenses

34,352

34,001

1

Other expenses were marginally higher as compared to the previous financial year primarily due to higher purchase of power due to increase in thermal coal prices along with higher repairs to machinery owing to higher production during the year, regular upkeep and IT implementation expenses. Higher conversion charges mainly due to conversion of pellets by subsidiary company. Moreover, there was increase in other general expenses mainly in travelling, CSR and others. These were offset by, decrease in royalty charges mainly on account of lower additional royalty on sale of iron ore along with decrease in rates of iron ore. Rates and Taxes decreased in line with lower royalty and lower electricity duty. Moreover, favourable exchange rate movement on inter-company loans/receivables resulted in gain during the current year. Consumption of stores and spares increased primarily on account of charging of project expenses for Kalinganagar Phase-II, which were majorly eliminated through transfer to capital account. g) Finance costs and net nance costs

(Rs. crore)

FY 23

FY 22

Change (%)

Finance costs 3,792 2,792 36
Net Finance costs 939 1,667 (44)

During the year under review, nance costs increased primarily on account of higher interest on domestic term loans owing to fresh utilisation during the current financial year for capital expansion projects, higher interest on short-term borrowings, commercial papers and buyers credit attributable to higher balances during the year. Net nance charges were lower primarily on account of higher interest income on inter- corporate deposits, partly offset by higher nance cost along with and lower gain on sale of mutual funds. h) Exceptional items

(Rs. crore)

FY 23

FY 22

Change (%)

Exceptional items (779) (235) -

The details of exceptional items for the current year and previous year are as follows:

•Profit on sale of investments held in Subsidiaries and Joint Ventures 339 crore (previous year: 344 crore).

•Provision for Impairment of investments/doubtful advances (net of reversals) 1,056 crore (previous year: 93 crore).

•Restructuring and other provisions Nil. (previous year: 205 crore which primarily includes charge on Employees Family Protection Scheme for COVID-19).

•Provision for Employee Separation scheme (‘ESS) under under Sunehere Bhavishya Ki Yojana (‘SBKY) scheme and other schemes amounting to 92 crore (previous year: 331 crore).

•Fair valuation gain on investments amounting to 31 crore (previous year: gain of 50 crore on debentures held by the Company in one of its Joint Ventures). i) Property, Plant and Equipment (PPE) including intangibles and right of use assets

(Rs. crore)

FY 23

FY 22

Change (%)

Property, Plant and
84,942 87,946 (3)
Equipment
Capital work-in-progress 21,092 14,159 49
Goodwill 3 0 N.A.
Other Intangible assets 761 806 (6)
Intangible assets under
515 383 35
development
Right of use Assets 5,480 5,538 (1)
Total PPE including
intangibles & right of 1,12,793 1,08,832 4
use assets

The movement in total PPE including intangible is higher primarily on account of increase in capital work-in-progress mainly at Kalinganagar Phase-II and normal additions during the year, which was offset by depreciation and amortisation charge during the year. j) Investments

(Rs. crore)

FY 23FY 22 Change (%)

Investment in Subsidiary,

28,75429,167 (1) JVs and Associates Investments - Non current15,38514,234 8 Investments - Current 2,050 96 2,033

Total investments46,189 43,498 6

The increase in investments was predominantly on account of increase in Non-current investments mainly due to interest accrued on preference shares of TSLP along with increase in current investments. Decrease in investments in Subsidiary, JVs and Associates is mainly on account of sale of investment in NatSteel Asia Pte. Ltd. along with provision for impairment on investments in TSH pertaining to TSUK, partly offset by increase in investment at TSML and NINL. k) Inventories

(Rs. crore)

FY 23

FY 22

Change (%)

Finished and semi-
finished goods including 7,873 6,731 17
stock in trade
Work-in-progress 0 0 -
Raw materials 8,527 9,289 (8)
Stores and spares 4,396 3,923 12
Total inventories 20,796 19,943 4

Finished and semi-finished inventory increased as compared to previous year mainly due to increase in stock quantities as compared to the previous year due to higher production, along with marginally higher rates of finished and semi-finished attributable to increase in raw material prices. Raw material inventories have decreased over the previous year primarily on account of decrease in the quantity and prices of imported coking coal and thermal coal during the year.

Stores and spares inventory increased due to higher requirement. l) Trade receivables

(Rs. crore)

FY 23

FY 22

Change (%)

Gross trade receivables 3,556 3,453 3
Less: allowance for credit
204 173 18
losses
Net trade receivables 3,352 3,280 2

Trade receivables increased marginally as compared to that of the previous year primarily due to increase at profit centres primarily at New Material Business on account of higher sales and at FAMD in group company receivables for conversion income, partly offset by decrease in receivables from domestic steel customers due to higher financing and lower export debtors.

m) Gross debt and Net debt

(Rs. crore)

FY 23

FY 22

Change (%)

Gross debt 42,372 36,525 16
Less: Cash and Bank
balances (incl. non- 1,153 2,935 (61)
current balances)
Less: Current investments 2,050 96 2,033
Net debt 39,169 33,494 17

Gross debt was higher due to utilisation of various term loans and issue of Debentures during the year majorly for funding expansion projects, partly offset by repayment of short-term loan during the year.

Net debt was comparatively higher as compared to previous year. This is attributable to increase in the in gross debt along with decrease in cash and bank balances, partly offset by increase in current investments. n) Cash Flows

(Rs. crore)

FY 23

FY 22

Change (%)

Net cash from/(used in)
14,227 41,986 (66)
operating activities
Net cash from/(used in)
(11,061) (34,168) 68
investing activities
Net cash from/(used in)
(4,979) (7,368) 32
financing activities
Net increase/(decrease)
in cash and cash (1,813) 450 (503)
equivalents

Net cash ow from/(used in) operating activities

During the year under review, the net cash generated from operating activities was 14,227 crore as compared to 41,986 crore during the previous year. The cash in ow from operating profit before working capital changes and direct taxes during the current year was 25,365 crore as compared to in ow of 50,307 crore during the previous year due to decline in operating profits. Cash outflow from working capital changes in 2022-23 is mainly due to decrease in Non-current/current financial and other liabilities/provisions by 4,556 crore primarily due to decrease in trade payables for coal purchases, along with increase in inventories by 1,012 crore primarily due to increase in quantities. Increase in Non-current/Current financial and other assets by 679crore,intradereceivablesandotheradvanceswithpublic bodies. The income taxes paid during the current year was 4,891 crore as compared to 11,240 crore (net of refund received for earlier years) during previous financial year.

Net cash ow from/(used in) investing activities

During the year under review, the net cash outflow from investing activities amounted to 11,061 crore as compared to 34,168 crore during the previous year. The outflow during the current year broadly represents capex of 8,555 crore, investments in subsidiaries 1,246 crore mainly in Tata Steel Mining Limited and Neelachal Ispat Nigam Limited, Inter Corporate Deposits given net of realisation amounting to 676 crore, purchase of current investments 1,822 crore, partly offset by net sale of investments of 1,112 crore which primarily includes sale of NatSteel Asia Pte. Ltd.

Net cash ow from/(used in) financing activities

During the year under review, the net cash outflow from financing activities was 4,979 crore as compared to an outflow of 7,368 crore during the previous year. The outflow during the current year broadly represents payment of dividend 6,233 crore and payment of interest 3,856 crore. The outflow was partly offset by, additional loans taken during the year including nance lease (net of repayments) 5,123 crore as against net repayment of borrowings of 1,033 crore in the previous year. o) Changes in Key Financial Ratios

The change in the key financial ratios as compared to previous year is stated below:

(Rs. crore)

FY 23

FY 22

Change (%)

Inventory Turnover 1 (days) 59 47 26
Debtors Turnover (days) 9 9 0
Current Ratio 2 (Times) 0.86 0.62 38
Interest Coverage Ratio 3
10.40 22.84 (54)
(Times)
Debt Equity (Times) 0.33 0.33 (2)
Net Debt Equity (Times) 0.30 0.30 (1)
EBITDA Margin 4 (%) 21.84 39.88 (45)
Net Profit Margin 5 (%) 12.01 25.59 (53)
Return on average Net
11.91 29.93 (60)
Worth 5 (%)

1)Inventory Turnover Ratio: Increased primarily on account of increase in average inventory during the current year and previous year owing to increase in prices of raw materials primarily coking coal.

2)Current Ratio: Increased primarily on account of reduction in current liabilities and provisions primarily for raw materials.

3)Interest Coverage Ratio: Decreased primarily on account of decline in operating profits along with higher nance cost due to increase in loans.

4)EBITDA Margin: Decreased primarily on account of decline in operating profits primarily on account of higher raw material cost and lower steel realisations.

5)Net Profit Margin and Return on average net worth: Decreased primarily on account of decrease in net profits mainly attributable to lower operating profits during the current year.

2.Tata Steel Limited (Consolidated)

The consolidated profit after tax of the Company was 8,075 crore as against 41,749 crore in the previous year. The decrease was mainly due to lower operating profits attributable to increase in raw material prices primarily of coking coal along with reduction in steel prices across geographies except Europe during the year and increase in finance cost due to additional loans at Tata Steel Standalone. Tax expenses was higher during the year due to higher non cash deferred tax charge at TSE mainly on account of de-risking of pension liabilities as compared to a credit in the previous year primarily attributable to TSBSL merger. The basic and diluted earnings for FY2022-23 were at 7.17 per share (previous year: basic and diluted: 33.24 per share and 33.21 per share respectively). The analysis of major items of the financial statements is given below.

(Note: On September 30, 2021, T S Global Holdings Pte. Ltd. (‘TSGH)

(an indirect wholly-owned subsidiary of the Company) divested its entire stake in NatSteel Holdings (‘NSH), while the wires business in Thailand which was owned by NSH was retained within the Group. The performance of Neelachal Ispat Nigam Ltd. (‘NINL) is included in the FY2022-23 as the company started its operations during the year post acquisition.)

a) Revenue from operations

(Rs. crore)

FY 23

FY 22

Change (%)

Tata Steel (Standalone) 1,29,007 1,29,021 (0)
TSE 90,300 90,023 0
TSLP 8,992 6,802 32
South-East Asia 9,189 12,195 (25)
Others 97,808 82,269 19
Eliminations &
(91,943) (76,351) (20)
adjustments
Total revenue from
2,43,353 2,43,959 (0)
operations

The consolidated revenue from operations was marginally lower as compared to the previous year primarily due to significant decline in realisations across geographies except Europe. Deliveries were lower mainly at European operations, due to weakening of demand and at South-East Asia due to sale of NatSteel Holdings Pte. Ltd. (NSH) in FY2021-22. This was partly offset by higher deliveries at Tata Steel standalone operations.

Revenue at TSLP increased due to acquisition of NINL during the year. Revenues at TSE increased in GBP terms by 5% due to improved average revenue per tonne which more than offset the lower deliveries. Adverse exchange impact on translation had an offsetting impact on the increase at TSE. Others primarily include increase at TS Global Procurement which are majorly eliminated on consolidation. b) Purchases of stock-in-trade

(Rs. crore)

FY 23

FY 22

Change (%)

Tata Steel (Standalone) 7,467 4,089 83
TSE 3,428 4,883 (30)
TSLP - - N.A.
South-East Asia 4,616 7,425 (38)
Others 10,240 9,733 5
Eliminations &
(10,637) (10,817) 2
adjustments
Total purchases of
15,114 15,313 (1)
stock-in-trade

Purchases were lower at South-East Asia (SEA) due to divestment of Singapore operations at NatSteel Holdings in FY2021-22, along with lower billet production at Thailand in the current year. Purchases decreased at TSE due to lower external purchases consistent with decline in deliveries.

Increase at Tata Steel (Standalone) attributable to increase in purchases of scrap owing to higher quantities coupled with higher prices along with higher purchase of rebars from group companies for trading and increase at other sustainable businesses. c) Cost of materials consumed

(Rs. crore)

FY 23

FY 22

Change (%)

Tata Steel (Standalone) 54,012 35,257 53
TSE 38,982 35,306 10
TSLP 6,853 3,930 74
South-East Asia 1,795 1,248 44
Others 76,972 62,082 24
Eliminations & adjustments (77,131) (62,059) (24)
Total cost of materials
1,01,483 75,764 34
consumed

Consumption was higher across all major entities mainly due to higher cost of consumption of imported coal & other raw materials owing to higher prices and higher consumption due to higher production. TSE reported increase in GBP terms primarily due to higher coal and coke prices. Increase at TSLP was mainly due to acquisition of NINL and higher coal prices. Others primarily reflects increase in transactions at T S Global Procurement due to increase in coal prices, which are majorly eliminated on consolidation. d) Employee benefits expense

(Rs. crore)

FY 23

FY 22

Change (%)

Tata Steel (Standalone) 6,616 6,366 4
TSE 13,687 14,879 (8)
TSLP 391 216 80
South-East Asia 318 554 (43)
Others 1,261 1,171 8
Eliminations &
146 78 87
adjustments
Total employee
22,419 23,264 (4)
benefits expense

Decrease in expenses was mainly at TSE primarily due to decrease in variable pay provisions due to reduced profitability along with favourable exchange impact on translation.

Decrease at SEA was mainly due to divestment of Singapore operations at NSH in the previous year, along with lower variable pay provisions at Thailand.

Increase in expenses at Tata Steel (Standalone) was mainly due to salary revisions and its consequential impact on retirement provisions. Increase at TSLP was attributable to acquisition of NINL during the year. e) Depreciation and amortisation expense

(Rs. crore)

FY 23

FY 22

Change (%)

Tata Steel (Standalone) 5,435 5,464 (1)
TSE 2,387 2,451 (3)
TSLP 716 320 124
South-East Asia 92 199 (53)
Others 795 735 8
Eliminations & adjustments (90) (68) (32)
Total depreciation and
9,335 9,101 3
amortisation expense

Expense was higher than the previous year mainly on account of increase in depreciation charge at TSLP due to acquisition of NINL during the year, partly offset by decrease at SEA due to sale of NatSteel Holdings Pte. Ltd. (‘NSH) in the previous year. f) Other expenses

(Rs. crore)

FY 23

FY 22

Change (%)

Tata Steel (Standalone) 34,352 34,001 1
TSE 30,958 27,910 11
TSLP 2,871 1,562 84
South-East Asia 1,831 2,195 (17)
Others 9,278 11,831 (22)
Eliminations & adjustments (3,895) (3,773) 3
Total other expenses 75,395 73,726 2

Other expenditure represents the following expenditure:

(Rs. crore)

FY 23

FY 22

Change (%)

Consumption of stores
21,475 15,959 35
and spares
Repairs to buildings 90 117 (23)
Repairs to machinery 11,584 9,572 21
Relining expenses 339 320 6
Fuel oil consumed 1,467 1,057 39
Purchase of power 8,060 6,971 16
Conversion charges 3,092 2,866 8
Freight and handling
12,648 12,139 4
charges
Rent 2,923 2,672 9
Royalty 6,924 9,311 (26)
Rates and taxes 1,971 2,517 (22)
Insurance charges 696 481 45
Commission, discounts
357 326 10
and rebates
Allowance for credit losses/
10 83 (88)
provision for advances
Other expenses 8,883 12,225 (27)
Less :-Expenditure (other
than interest) transferred (5,124) (2,890) 77
to capital & other accounts
Total Other expenses 75,395 73,726 2

Expenses were marginally higher at Tata Steel (Standalone) primarily due to higher purchase of power due to increase in thermal coal prices, higher repairs to machinery, higher conversion charges. Other general expenses increased mainly in travelling, CSR. OFFset by, decrease in royalty charges mainly on account of lower additional royalty on sale of iron ore along with lower rates and taxes. Moreover, favourable exchange rate movement on inter-company loans/receivables resulted in gain during the current year. TSE reported increase mainly on account of higher consumption of stores & spares primarily on account of higher prices of gases (energy cost) and higher ferro alloys prices, higher repairs to machinery and higher freight and handling charges increased at TSLP mainly due to acquisition of NINL during the year. Decrease at SEA was mainly due to divestment of Singapore operations at NSH in the previous year, partly offset by higher expenses at Thailand attributable to higher fuel cost and higher power costs due to increased tari s. Decrease in Others was mainly at T S Global Holdings Pte Ltd. due to lower foreign exchange loss on account of change in functional currency during the year. g) Finance costs

(Rs. crore)

FY 23

FY 22

Change (%)

Tata Steel (Standalone) 3,792 2,792 36
TSE 1,296 1,945 (33)
TSLP 1,387 110 1,162
South-East Asia 15 34 (56)
Others 5,583 4,158 34
Eliminations &
(5,774) (3,577) 61
Adjustments
Finance costs 6,299 5,462 15

h) Net Finance costs

(Rs. crore)

FY 23

FY 22

Change (%)

Tata Steel (Standalone) 939 1,667 (44)
TSE 1,166 1,480 (21)
TSLP 1,207 83 1,347
South-East Asia 3 30 (91)
Others 2,352 1,797 31
Eliminations & Adjustments (8) (40) (79)
Net Finance costs 5,659 5,017 13

Finance cost increased by 15% primarily at Tata Steel (Standalone) was mainly on account of higher interest on domestic term loans owing to fresh utilisation during the current financial year for capital expansion projects along with higher interest on short-term borrowings, commercial papers and buyers credit.

Increase at TSLP was primarily due to issue of preference shares for NINL acquisition, eliminated on consolidation. Decrease at TSE was mainly due to lower debt levels attributable to repayments during the year and in previous year.

Decrease at SEA was primarily due to divestment of NSH in Q2 FY2021-22 and reduction in Rs.nance charges at TSTH.

Net nance charge was higher in line with higher nance cost due to increase in loan over the period. i) Exceptional items

(Rs. crore)

FY 23

FY 22

Change (%)

Tata Steel (Standalone) (779) (235) N.A.
TSE 201 (248) N.A.
TSLP (2) (27) N.A.
South-East Asia (48) (18) N.A.
Others 0 21 N.A.
Eliminations & Adjustments 741 373 N.A.
Total exceptional items 113 (134) N.A.

Exceptional items during FY2022-23 primarily represents:

•Gain on sale of non-current investments at TSE amounting to 67 crore.

•Impairment reversal 96 crore at TSE on deferred consideration of Speciality Business.

•Net impairment reversal in respect of property, plant and equipment (including capital work-in-progress), right-of-use assets and other assets at TSE 37 crore.

•Fair valuation gain on non-current investments amounting to 31 crore at Tata Steel Limited (Standalone).

Partly offset by,

•Net Provision for ESS amounting to 92 crore under SBKY scheme at Tata Steel Limited (Standalone).

•Expenses incurred in stamp duty and registration fees for a portion of land parcels and mines acquired as part of business combination amounting to 2 crore at TSLP.

•Impairment of Mini Blast Furnace at TSTH amounting to 11 crore.

•Net impairment charge of 12 crore on ICDs & investments in one of the associates at Tata Steel Limited (Standalone).

The exceptional items in FY2021-22 primarily represents:

•Restructuring and other provisions includes charge on Employees Family Protection Scheme for COVID-19 amounting to 215 crore at Tata Steel Limited (Standalone), TSDPL and at Tata Steel Utilities and Infrastructure Limited (‘TSUISL).

•Expenses incurred in stamp duty and registration fees for a portion of land parcels and mines acquired as part of business combination amounting to 27 crore at TSLP.

•Redundancy provisions at TSE amounting to 14 crore.

•Impairment charges (net of reversal) 172 crore in respect of property, plant and equipment (including capital work-in-progress), right-of-use assets and other assets primarily at TSE and TSTH.

•Net Provision for ESS amounting to 331 crore primarily under Second Innings Scheme 123 crore along with charge for ESS under SBKY scheme amounting to 208 crore at Tata Steel Limited (Standalone).

•Impairment of ICDs given to some of the Joint Ventures of the Company 100 crore at Tata Steel Limited (Standalone).

•Impairment on outstanding deferred consideration at TSE 81 crore.

Partly offset by,

•Profit on sale of subsidiaries and non-current investments in NSH 725 crore.

•Reversal of fair valuation loss previously taken on investment in debentures of a joint venture of the Company amounting to 50 crore at Tata Steel Limited (Standalone).

•Gain on sale of land amounting to 31 crore at Tata Metaliks Limited. j) Property, Plant and Equipment (PPE) including intangibles and right of use assets

(Rs. crore)

FY 23

FY 22

Change (%)

Tata Steel (Standalone) 1,12,793 1,08,832 4
TSE 31,048 26,246 18
TSLP 15,511 4,132 275
South-East Asia 1,029 969 6
Others 12,904 11,823 9
Eliminations & adjustments (1,049) (980) (7)
Total PPE inlcuding
intangibles & right of 1,72,236 1,51,022 14
use assets

PPE and intangibles increased by 14% primarily due to acquisition of NINL by TSLP during the year. Increased at Tata Steel Standalone due to increase in capital work-in-progress mainly at Kalinganagar Phase-II and normal additions during the year, which was offset by depreciation and amortisation charge during the year. Increase at TSE was on account of fresh additions in plant and machinery during the year and in capital work in progress offset by depreciation and amortisation charge during the year.

Increase at Others was mainly on account of additions at Tata Steel Mining Limited post acquisition of Rohit Ferro-Tech Limited during the year. k) Inventories

(Rs. crore)

FY 23

FY 22

Change (%)

Finished and semi-

finished goods including

17,488 16,131 8

stock in trade

Work-in-progress

9,439 6,602 43

Raw materials

20,795 20,441 2

Stores and spares

6,693 5,650 18

Total Inventories

54,415 48,824 11

FY 23

FY 22

Change (%)

Tata Steel (Standalone)

20,796

19,943 4
TSE

25,226

22,622 12
TSLP

2,336

1,350 73
South-East Asia

1,200

1,385 (13)
Others

5,038

3,921 28
Eliminations &

(181)

(397) 55
Adjustments
Inventories

54,415

48,824 11

Increase was primarily at TSE attributable to build-up of slab inventory at IJmuiden in order to support operations during an extended outage for the Blast Furnace 6 reline at the start of FY2023-24. Increase at Tata Steel Standalone mainly on account of increase in quantities and rates of Finished and semi-finished inventory owing to higher production. Raw material inventory decreased due to lower quantities of imported coking and thermal coal.

Increase at TSLP was primarily on account of acquisition of NINL during the year.

Decrease in SEA was primarily due to lower stock quantities on account of lower production.

Increase in others was primarily on account of higher inventory at Tata Steel Mining Limited.

l) Trade receivables

(Rs. crore)

FY 23

FY 22

Change (%)

Tata Steel (Standalone) 3,352 3,280 2
TSE 4,782 8,611 (44)
TSLP 196 60 224
South-East Asia 1,017 1,103 (8)
Others 10,730 11,716 (8)
Eliminations & adjustments (11,820) (12,524) 6
Net trade receivables 8,257 12,246 (33)

Decrease was primarily at TSE mainly due to sharp decline in steel prices towards the second half of the financial year. Increase at Tata Steel (Standalone) was primarily at profit centres majorly from new material business due to increase in sales. Decreased at SEA mainly at Siam Industrial Wire Co. Ltd. due to higher collection. Decrease in Others was primarily at Tata Steel Global Procurement (‘TSGP) majorly eliminated on consolidation. m) Gross debt and Net debt

(Rs. crore)

FY 23

FY 22

Change (%)

Gross debt 84,893 75,561 12
Less: Cash and Bank
balances (incl. non- 13,453 15,988 (16)
current balances)
Less: Current investments 3,630 8,524 (57)
Net debt 67,810 51,049 33

Net debt was higher by 16,761 crore over previous year. Gross debt at 84,893 crore was higher by 9,332 crore as compared to the previous year. Increase in gross debt was mainly on due to net drawal of new term loans and Debentures primarily at Tata Steel Standalone for funding expansion projects. The increase was further expanded by adverse exchange rate movements on the borrowings. The increase in Net Debt was in line with increase in gross debt along with decrease in cash and cash equivalents including current investments mainly at TSLP post NINL acquisition, partly offset by increase at TSE and Siam Industrial Wire Co. Ltd. n) Cash Flows

(Rs. crore)

FY 23

FY 22

Change (%)

Net Cash from/(used in)
21,683 44,381 (51)
operating activities
Net Cash from/(used in)
(18,679) (10,881) (72)
investing activities
Net Cash from/(used in)
(6,981) (23,401) 70
financing activities
Net increase /
(decrease) in cash and (3,977) 10,099 (139)
cash equivalents

Net cash ow from/(used in) operating activities

During the year under review, the net cash from operating activities was 21,683 crore as compared to 44,381 crore during the previous year. The cash in ow from operating profit before working capital changes and direct taxes during the current year was 30,908 crore as against 65,900 crore during the previous year re ecting decline in operating profits during the current year. Cash outflow from working capital changes during the current period was 3,707 crore primarily due to increase in inventory by 4,031 crore, decrease in Non-current/Current financial and other liabilities/provisions by 3,069 crore, partly offset by, decrease in current/non-current financial assets by 3,394 crore. The payments of income taxes during the year under review were 5,519 crore as compared to 11,902 crore during the previous year mainly at Tata Steel Standalone.

Net cash ow from/(used in) investing activities

During the year under review, the net cash outflow from investing activities was 18,679 crore as against an outflow of 10,881 crore during the previous year. The outflow during the year broadly represents capex of 14,142 crore and acquisition of subsidiaries/business undertakings amounting to 10,569 crore, majorly NINL. OFFset by Sale (net of purchase) of current investments amounting to 5,189 crore. In ow on account of interest and dividend receipt 565 crore.

Net cash ow from/(used in) financing activities

During the year under review, net cash outflow from financing activities amounted to 6,981 crore as against outflow of 23,401 crore during the previous year. The net outflow primarily represents payment of dividend 6,293 crore and interest payment 6,120 crore partly offset by proceeds from borrowings (net of repayments including nance lease) 5,428 crore. o) Changes in Key Financial Ratios

The change in the key financial ratios as compared to previous year is stated below:

(Rs. crore)

FY 23

FY 22

Change (%)

Inventory Turnover 1
79 62 27
(days)
Debtors Turnover (days) 15 16 (6)
Current Ratio (Times) 1.01 1.07 (5)
Interest Coverage Ratio 2
6.01 12.82 (53)
(Times)
Debt Equity (Times) 0.76 0.78 (2)
Net Debt Equity (Times) 0.61 0.52 16
EBITDA Margin 3 (%) 13.44 26.16 (49)
Net Profit Margin 4 (%) 3.32 17.11 (81)
Return on average Net
7.27 42.91 (83)
Worth4 (%)

1)Inventory Turnover Ratio: Increased primarily on account of increase in average inventory during the current year and previous year owing to increase in prices of raw materials primarily coking coal.

2)Interest Coverage Ratio: Decreased primarily on account of decline in operating profits along with higher nance cost due to increase in loans.

3)EBITDA Margin: Decreased primarily on account of lower operating profits across geographies due to increase in raw material costs mainly coking coal and lower steel realisations in India.

4)Net Profit Margin and Return on average net worth: Decreased primarily on account of decline in net profits mainly attributable to lower operating profits and higher net nance charge.

VI. Strategy

The year under review saw a challenging external environment due to lack of buoyancy in commodity markets. Raw material prices have also been unfavourable due to its high volatility caused by on-going Russia-Ukraine crisis and periodic COVID-19 outbreaks in China. After a steep decline in Rs.rst half of the year, steel prices have marginally improved during the latter part of the year.

Despite various headwinds, the Company has maintained focus on strengthening the balance sheet and executing the growth plans in India. Tata Steel remained dedicated to achieving its goal of becoming the most respected and valuable steel company globally.

Tata Steel showed resilience in a testing environment and maintained a strong balance sheet. Also, the Company has successfully maintained its investment grade credit rating. Simpli cation of portfolio continues with merger of subsidiaries including Tata Steel Long Products Limited and the Tinplate Company of India Limited into Tata Steel. The Company remains committed to achieve its 2030 growth plan. The following objectives will help achieve the Companys goals:

Market Leadership in India:

Structural factors such as rapid urbanisation, infrastructure investment growth, domestic manufacturing push and increasing a ordability are driving demand for steel in India. Demand growth coupled with large raw material reserves and strong base of technically skilled manpower, gives structural advantages for steel industry growth. Tata

Steel plans to leverage this growth potential through organic expansion. The Company is well on its track to double its India production capacity by 2030. In the year under review, TSL restarted the steel manufacturing unit of NINL, which was completed within 3 months of acquisition. This will facilitate achieving the objective of balancing the product portfolio between longs and ats. In FY2022-23, the Company made good progress in TSK phase 2 project which will help produce the necessary volumes and grades of steel to serve evolving customer needs. Projects supporting the raw material su ciency are also well on track.

Becoming an industry leadership will require further work in the areas of digital adoption, deepening understanding of changing consumer behaviour, and building a culture of customer obsession throughout the organisation. Key attributes of leadership are focused on delivering innovative products & services, serving existing and emerging customer needs and providing the best customer experience.

Consolidate position as global cost leader:

Raw material prices and Steel prices have been extremely volatile due to the ongoing Russia-Ukraine con ict and changes in the Chinese steel demand outlook. To remain ahead in these uncertain times, it is imperative to focus on both operational and structural cost improvement initiatives. This is enabled by focussing on three types of initiatives in India and International sites. First is operational cost saving through programmes such as Aspire and Shikhar25, Tata Steel has achieved global/ Indian benchmark levels on multiple operating KPIs by process improvements. Second type of initiatives are through structural cost reduction, viz Investments in augmenting the raw material portfolio to meet increasing demand, strengthening logistics networks and fixed cost reduction, etc. The idea is to use digital solutions, technology, and infrastructure to enable cost e ciencies. Third type of initiatives are about Simpli cation, e.g Tata Steel is in the process of merging its subsidiaries including Tata Steel Long Products Limited and The Tinplate Company of India Limited and separated operations in UK and the Netherlands. These strategic changes will also enhance synergy opportunities across the group.

Attain leadership position in adjacent businesses:

Customer expectation and technologies are both evolving at an unprecedented pace, creating opportunities for growth in businesses adjacent to the Steel industry. The approach is to di erentiate through deep understanding of customer needs, relevant technology based solutioning and developing relevant capabilities through the eco-system. Adjacent businesses where the Company aspires to attain leadership positions are:

1)Services & Solutions (‘S&S): Leveraging the Companys extensive experience to create solutions for construction and household applications such as doors, windows, and housing solutions.

2)New Materials Business (‘NMB): Leveraging trends such as light-weighting, the Company is working to strengthen its non-steel materials business. These businesses which are high on technology intensity, provides a unique opportunity for the Company to offer boutique solutions to the consumer. Currently, Tata Steel is focused on materials such as, fibre reinforced polymer, composites, medical materials, and graphene.

3)Commercial Mining: The Governments ‘Atmanirbhar Bharat Programme, regulatory changes, and the need to meet captive raw material requirements beyond 2030 have encouraged the Company to pursue a sustainable mining business. Tata Steels rich expertise of mining is the core foundation of creating large scale commercial mining business.

Leadership in sustainability: Tata Steel recognises that sustainability is a significant challenge for hard to abate industries, like steel. For this, the Company aspires to take leadership role in the following areas: reduction in specific carbon emission intensity across the value chain, reduction in specific water consumption, reduction of specific dust emissions, enhancing circular economy as a business model, and enriching the biodiversity in areas of our operations. The Company has set ambitious targets in each of these areas and achieving these targets will require the adoption of innovative technologies and the use of new business models.

Strategic enablers:

The Company has identified 4 Strategic enablers to enable achieving its Strategic objectives. The first one is being the best place to work for in Manufacturing in India. This will support the Company to attract and retain talent, that is future ready. This involves having empowering policies, developing best-in-class infrastructure, and having a healthy and safe environment for all employees. Tata Steel is deploying technology and process intervention to achieve this objective.

The second strategic enabler is being a digital leader in steel industry globally. Adopting a digital first approach shall help the Company to unlock value at multiple levels. The Company has made significant strides in this regard. Tata Steel is one of the few enterprises in the world with three manufacturing sites in the Global Lighthouse network by World Economic Forum. Tata Steel is also scaling its various digital initiatives for customers and partners across the globe.

The Company recognises that technology led di erentiation in products and processes is going to be key to attain and sustain a leadership position in the industry. To this e ect, Tata Steel aspires to be among the top 5 in steel technology globally, as its third strategic enabler. This will enable the Company in meeting emerging needs of existing and new segments and challenges viz. reduction of COFF and other Green House gas emissions. The fourth strategic enabler focuses on fostering a culture which makes Tata Steel future-ready. Tata Steel has embedded culture of, TQM & continuous improvement, safety, ethics, environment consciousness and giving back to the community in the DNA of the organisation. To remain continuously future ready, Tata Steel is working on various initiatives to nurture the culture of Agility, Innovation, while deepening strategic orientation in the organisation.

VII. Human Resource Management and Industrial Relations.

At Tata Steel, leveraging human capital is a key business imperative and the principle of always putting people first guides the Companys policies. Our constant endeavour is to foster a work culture that promotes collaboration, innovation, high performance, and agility. This has led us on a path of a new world of possibilities, requiring us to work on a new set of challenges for a future-ready workforce.

We have 100+ years of a strong legacy of working in alliance with our various stakeholders. With an aim of encouraging open communication, diverse thinking, and advocacy, a new union was formed and recognised at Tata Steel Kalinganagar for the first time. We strongly believe that this historic move will further strengthen our culture of working together and in joint consultation.

With an intent to break the barriers, provide equitable opportunities to historically excluded groups, and catapult them to the mainstream, Tata Steel has maintained its strong focus on Diversity, Equity, and Inclusion. We recruited 1,100+ diverse talents, which includes a focused hiring e ort of bringing 100+ transgender employees into the organisation; a one-of-its-kind and pioneering initiative. The Queerious Challenge was launched to open opportunities for young queer talent across the country contesting in a case study competition which resulted in scholarship awards, internship opportunities, and pre-placement offers.

For our consistent e orts towards overcoming Industry stereotypes, Tata Steel has been recognised as Global Diversity Equity & Inclusion (DEI) Lighthouse 2023 by World Economic Forum (WEF). We also have been recognised as one of the ‘Gold Standard Organisations by the India Workplace Equity Index and have been adjudged as the ‘winner by ‘SHRM HR Excellence Awards 2022 in the category of ‘Excellence in Diversity & Inclusion.

To bring further alignment with the cultural ethos of the organisation and to leverage our internal talent, we introduced agile behavioural assessments and Employee Referral Programme.

The organisation has been consistently working towards enabling career growth and learning opportunities for its people. stepUP, our AI-driven internal talent marketplace has been facilitating people with projects and mentoring opportunities. To empower people to take charge of their careers and invest in their aspirations, the scope of stepUP was extended with full-time roles, where people with the right skillset can seize the opportunity and have a chance at horizontal mobility. Ongoing learning and capability development practices were expanded in terms of reach and coverage, and new initiatives were launched to keep up with the rapidly evolving skilling needs. 16 new Schools of Excellence (SoEs) were added in areas such as operations, maintenance, mining, Engineering and Projects, and digital domains taking the total number of ongoing Schools to 41. Some of the older SoEs graduated to the ‘Advanced level in their journey to create experts in various domains. Partnerships were initiated with renowned content providers and new learning platforms to offer more choices to learners and enhance their upskilling experience. An ‘Executive Diploma Programme in Projects & Construction Management in collaboration with National Institute of Construction Management and Research (NICMAR) has been launched to strengthen in-house capabilities in the Engineering and Projects area. The conscious adoption of ‘VR and simulation-based training has enabled experiential learning for our employees. About 2,000 cadre trainees were trained on functional and transformational skills to make them job ready. The organisation onboarded dedicated batches of trans-gender & AA community trainees, reflecting its focused priorities around diversity and affirmative action. Vendor skill development was also given greater focus, with almost 1,00,000 assessments being carried out across all TSL locations. With all these e orts and many more, almost 90% of the entire employee base could be impacted through one or more learning interventions. The organisation won the ‘Regional round in the ‘Industry and ‘Student categories of the World Steel Championship and will be competing in the World Championship organised by World Steel Association. It was also awarded the ‘1st Position for the ‘Best Establishment 2023 with 39 medals in the 33rd CII National Skill Competition.

We are continuously reimagining ways to ful l changing employee needs and expectations by providing contextual people experience through impactful initiatives. We rolled out ‘Moments that Matter as an initiative to capture the various impactful moments of an employees life, like work anniversaries, parenthood, etc. We revamped our recognition mechanism to include experiential rewards and provide a uni ed experience across our employee segments. TSL has been investing in optimising business processes and systems through automation, mechanisation, and digitalisation. This has helped improve the overall productivity from 850 tonnes of crude steel/employee/year to 885 tonnes of crude steel/employee/year.

For its continuous commitment towards a progressive people-first approach, Tata Steel has been recognised as a Great Place to Work? for the 6th consecutive year. As we look ahead, we are con dent that our talented and dedicated workforce will enable us to achieve our goals and make a positive impact on our customers, community, and the world.

VIII.Digital Transformation

At Tata Steel, we continue to focus & invest towards our commitment to Cloud, Data, Arti cial Intelligence journey of digital transformation towards the Strategic Enabler 2 of Digital Leadership in the steel industry globally by 2025 (SE2).

Our investments in the business priority led - digitally enabled business transformation have paid us rich dividends. We have seen e ciency gains and are building newer ways of working that enable talent fungibility, safety, collaboration, and improved working conditions. As we deploy these templates across, we expect benefits of simplicity, synergy, scale, sustainability to kick-in thereby driving productivity, throughput & organisational agility. Like digital has changed many business models in other industries, our Company is also harnessing its power to build connected business platforms that help us speed up new product development, optimise our operations & supply chain end-to-end, enhance worker safety, drive speed and agility to optimise cash flows, and build best-in-class hyper-personalised customer, vendor, and employee experience.

We have made significant progress on data maturity as evidenced by the DATOMTM 2022 assessment which put our Company as a forerunner for data excellence. Our Company is now on its way to the next level of optimisation where data driven decisions and insights form a core part of our daily and strategic work. We have undertaken concrete steps to ensure we have the requisite richness in data quality to build a connected, and intelligent enterprise that is able to exploit the full potential of its data using the fast-growing capabilities of Arti cial Intelligence – the next level of transformation where AI will be offered as a service.

Generative AI, which has seen a non-linear progression during the last financial year, is expected to play a pivotal role in unlocking the latent potential of data. Our Company is engaging with best-in-class AI ecosystems across the world to lead this wave of change in the manufacturing industry that will see us move from an integrated and connected enterprise towards an integrated inter-operable ecosystem with a harmonised human-machine interface.

In this rapidly evolving tech. ecosystem, competition for hiring & retaining top tech. talent is likely to intensify. Our Company is well-placed to ride this cycle. Deep engagements with premier institutes across the country, supported by our well-recognised Management Trainee programmes, coupled with our robust lateral hiring programmes are allowing us to on-board the best tech talent to sustain our digital transformation journey. Tie-ups with global training & courseware platforms, and various in-house data & technology schools of excellence are providing our employees unparalleled opportunities to upskill & cross-skill themselves to stay ahead of the curve. Business model innovations underpinned by our past investments are allowing us to ensure our employees have top quality engagements while transactional work is outsourced, to bring work to the employee irrespective of location in the form of work from home, virtual command centres for manufacturing & mining creating benchmark employee engagement scores.

Well-entrenched governance structures and processes continue to ensure that there is rigour as well as management timeshare on the transformation with a dedicated team focussing exclusively on digital projects under the broader Shikhar25 umbrella.

With our Companys increasing digital footprint, the risk of Cybersecurity breaches is also going up. Our Company will continue to inculcate a culture of safe cyber-behaviour by all stakeholders in the organisation as this will be critical to ensure uninterrupted business operations.

IX. Corporate Finance

In January 2022, the International Monetary Fund (IMF) had estimated the global growth for 2022 and 2023 at 4.4% and 3.8% respectively. However, during the year, the global growth estimates for 2022 were reduced to 3.4% due to outbreak of the Russia-Ukraine War and monetary tightening by central banks to ght in ation.

In April 2023, IMF revised the global growth estimates for 2023 and 2024 at 2.8% and 3.0% respectively. The rise in central bank rates to ght in ation and Russia-Ukraine war in Ukraine continue to weigh on economic activity. The rapid spread of COVID-19 in China dampened growth in 2022, but the reopening has paved the way for a faster-than-expected recovery. The balance of risks has shifted rmly to the downside so long as the financial sector remains unsettled. Upside risks include renewed easing of supply chain bottlenecks and higher than expected consumptions levels. On the downside, severe health outcomes in China, further escalation in Russias war in Ukraine and tighter global financing costs could negative impact the growth rates. Financial markets could also suddenly reprice in response to adverse in ation news, while further geopolitical fragmentation could hamper economic progress.

In February 2022, RBI had estimated the GDP to grow by 7.8% in FY2022-23. However, during the year, RBI had reduced the GDP growth estimates for FY2022-23 to 7% on account of the ongoing Russia-Ukraine war, higher in ation across the globe leading to slowdown in demand. Volatile commodity prices had resulted in reduced margins for businesses.

For FY2023-24, RBI has estimated Indias GDP to grow at 6.5%, subject to certain upside and downside risks. Upside risks could emanate from stronger than anticipated rebound in the contact-intensive sector, restart of private investment boosted by Governments capex push, healthier corporate balance sheets, sharp reduction in commodity prices, better than expected global growth prospects and early resolution of geopolitical con icts. On the contrary, an escalation in geopolitical tensions, further hardening of international crude and commodity prices, sustained disruptions to supply chains, persistence of global financial market volatility, sharper loss of momentum in global trade and demand and weather related disruptions pose as downside risks.

Financial Markets:

Due to the in ationary pressures and US Fed rate hike, the 10 year US Bond Yield had steadily increased during the financial year. The aggressive rate hike has resulted in an inverted yield curve where yields on short term treasuries are higher than longer-term treasuries. The inverted yield curve suggests uncertainty in the near term, though yields are expected to stabilise in the long term. In March 2023, high volatility was observed in global financial markets on account of crisis in some banks in US and Europe. On the domestic front, financial markets remained volatile because of in ationary concerns, aggressive monetary tightening and geopolitical con ict in Ukraine. Due to the above-mentioned reasons, the market sentiments were bearish in the first half of the year, however, the sentiments improved on account of opening up major economies in the second half. Overall, the BSE Sensex closed at 58,962 points by end of March 2023, a growth of 0.7% in one year. In the bond markets, 10-year G-sec yields had largely been rangebound for the year. In February 2023, the 10-year benchmark G-sec yield marginally eased in response to the commitment to scal consolidation in the Union Budget 2023-24 and the announcement of lower than anticipated gross market borrowings. During the year, short end yields curve for corporate bonds had increased more than the increase in RBIs policy repo rate. while the long end yield curve for corporate bonds remained, range bound.

Central Banks and Monetary Policy:

As per IMF World Economic Outlook (April 2023), Global in ation is set to fall from 8.7% in 2022 to 7% in 2023 and 4.9% in 2024 which is still above pre-pandemic (2017–19) levels of about 3.5%.

During the year, US Fed raised the Federal Funds Rate (FFR) by 450 bps. However, given the recent events in banking sector, US Fed has turned more dovish with focus on policy rming to quell in ation instead of rate hikes. Fed expects the FFR to peak in May 2023, thereafter, remain stable for the rest of the year and start its downward trajectory in 2024. US FED forecasts, the Personal Consumption Expenditure (PCE) in ation at 2.8% this year, with core in ation at 3.5%. In 2024 and 2025, both total and PCE in ation are expected to be near 2%.

Similarly, in the Euro area also, CPI in ation was at 8.5% in February 2023 down from 8.6% in January 2023. In UK, the CPI in ation including owner occupiers housing costs (CPIH) for February 2023 was 9.2%, up from 8.8% in January 2023. The higher CPIH in ation rate largely came from housing and household services (mainly from electricity, gas, and other fuels), and food and non-alcoholic beverages. Bank of England raised rates by 350bps in FY2022-23.

Closer home, during the financial year, RBI increased its policy repo rate to 6.5% from 4.00%. RBIs actions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) in ation of 4% within a band of +/- 2%, while supporting growth. Given the CPI projected at 5.2% for FY2023-24, RBI is expected to keep rates unchanged.

Financing:

In FY2020-21 and FY2021-22, we deleveraged our gross debt by 40,761 crore which is much higher than our annual deleveraging target of USD 1 bn. The deleveraging programme helped strengthen the balance sheet of the Company considerably and prepared us for the next leg of growth. However, in FY2022-23, our Gross Debt increased to 84,893 crore from 75,561 crore due to very high volatility in the earnings, higher working capital requirements, higher capex requirement for completion of Tata Steel Kalinganagar project, acquisition of NINL and the highest ever dividend payout. Even after increase in gross debt in FY2022-23, our average debt reduction has been more than USD 1 bn per annum for the past 3 years. The Company e ciently triangulates its capital allocation between deleveraging, return to shareholders and growth capex to provide optimal returns to the shareholders. In FY2022-23, we prioritised growth capex, acquisition of NINL and stabilisation of plant along with working capital requirement in our capital allocation. We propose to return to our deleveraging journey in FY2023-24. The Cold rolling mill & pellet plant in Kalinganagar have started operations recently which will be margin accretive to the existing business. The Kalinganagar Phase II expansion is expected to be completed by the end of FY2023-24.

Credit Ratings:

During the year under review, international rating agency, S&P Global Ratings reaffirmed Tata Steels Corporate Family Rating at ‘BBB-‘ and revised the Outlook to Positive from Stable. Further, Moodys also rea rmed the rating to ‘Ba1 and revised the Outlook to Positive from Stable due to the Companys track record of good operating performance and conservative financial policy.

During the year, the domestic rating agencies, India Rating and CARE had rea rmed Tata Steels long term credit rating at AA+. India Rating revised the outlook from Stable to Positive.

X. Risks and Concerns

Tata Steel operates in an interconnected world with stringent regulatory and environment requirements, increased geopolitical risk and fast pace technological disruptions that could have a material impact across the value chain of the organisation. Tata Steel has implemented an Enterprise Risk Management (ERM) process to provide a holistic view of the aggregated risk exposure as well as to facilitate more informed decision-making.

In its journey towards Risk Intelligence, a robust governance structure has been developed across the organisation. The Board of Directors has constituted a Committee of the Board called the Risk Management Committee. At Senior Management level, an Apex Risk Committee (ARC) has been constituted to drive the ERM process across Tata Steel Group.

Information regarding Key Risks facing Tata Steel and their mitigation strategies is given below:

Financial Risks:

Tata Steel has 84,893 crore of debt as on March 31, 2023 and aspires to nearly double its capacity in India and reach 40 MnTPA by 2030 in a sustainable manner. The plan is to deleverage further and pace the growth in line with internal accruals but Tata Steel would also need to raise external capital from banks and capital markets. As the financial system in India is closely integrated with the global financial system, any funding plan may be a ected by risk appetite and sentiments of global financial market.

Separately, evolving climate change regulation and disclosure standards are also likely to weigh on availability of capital.

During the financial year, global financial markets have been amidst a transition from a low in ation rate dynamic to relatively persistent high in ation and interest rate environment. Globally, most of the major central banks have remained committed to raising benchmark rates to combat in ation despite geopolitics, volatility in energy prices and tight supply chains. US Fed has raised rates from around 0.25% in March 2022 to 5% by March 2023. In India, RBI increased the repo rate by 250 bps. For the Company, rising interest rate environment may adversely impact the cost of financing.

Tata Steel also has some exposure to currency volatility due to its imports of raw material and project equipment as well as foreign currency debt.

Mitigation Strategies:

Tata Steel has been actively mitigating the risk by de-risking the balance sheet with a focus on cash ow generation and deleveraging as we seek to strike a balance between growth and return to shareholders. We consciously diversify our sources to tap available pools of capital and proactively work towards raising longer term debt with exible terms. Our capital allocation strategy prioritises value-accretive projects with short payback periods.

During the year, we acquired NINL via our subsidiary Tata Steel Long Products Limited, and this was funded via a mix of internal accruals and debt. Despite the large cash pay outs, our group liquidity remains strong at 28,688 crore, gross debt remains at 84,893 crore and our financial metrices continue to be well within investment grade levels. Tata Steel is engaged with international bodies viz. Task Force on Climate – Related Financial Disclosures (TCFD) and is focused on improving ESG disclosures, complying with evolving standards and developing a sustainable financing framework.

We proactively manage our exposure to currency & interest rates and utilise a mix of instruments to hedge the same.

Macroeconomic and Market risks:

Steel demand is affected by geopolitical uncertainties, macro-economic outlook, trade barriers and protectionist trade policies. The prolonged inflationary pressures emanating especially from supply chain disruption of energy and commodities may impact global demand adversely. Changing customer preferences are triggered by adoption of newer grades of steel and sustainable steel products.

Mitigation Strategies:

Sticky high inflation, trade barriers and protectionist trade policies may impact steel demand. For instance, in FY2022-23 the Indian Government imposed export duty during May 2022 to November 2022 to control domestic inflation. Since TSL sales are majorly concentrated in the domestic market, the Company could manage the implication through recalibration of its sales mix at geography and at segment level to balance demand supply requirements.

The Company remains vigilant of the evolving market conditions and regulatory environment and closely analyses its impact on steel-intensive sectors.

In our endeavour to enhance footprint & leverage the growing opportunities in India, we have built a diversi ed portfolio of product offerings for customers from a range of industries. Dedicated marketing and sales teams service customers and build deep customer engagement by customising products, improving reliability, and providing value added services. Tata Steel has invested in building a strong marketing franchise with well-regarded brands and a large network of distributors, dealers, and stocking points across the country. E orts to identify and pursue micro-segmentation in customer segments to drive demand in the face of market volatility has helped in increasing sales and reducing the exposure to demand volatility. The Company has also delivered robust sales performance driven by rise in value added products. New products have been developed across customer segments. It has also built channels internationally to enable exports. In Europe, the Company continues to target and develop more di erentiated product sales mix for value-driven segments. Steel industry is cyclical and ways to mitigate the risk of cyclicality are by entering into long term contracts with discerning customers (especially automotive segment) and by offering solutions. Stringent quality norms of automotive customers help TSL in enhancing its technical competencies and develop new products. We have forayed into ready-to-use steel for construction industry and introduced products such as steel doors and windows, furniture to enhance our retail customer base. Nest-In has been recognised as Indias leading brand, 2022, in the steel-based modular construction solution category at the Indian Brand & Leadership Conclave, 2022. We are also diversifying our product offerings beyond steel by introducing new materials such as composites, Fibre Reinforced Products, etc. The Company has recorded a broad-based growth in domestic deliveries. The composites business has marked its presence in the industrial, infrastructure and railway segments and the focus is currently on market expansion and capacity augmentation. The Graphene business is delivering safest conveyance through ‘Wondra- (Graphene coating solutions) and value-based industrial solutions for the Company.

Regulatory Risks:

Indian Steel Industry is expected to grow at the rate of 6% to 7% during this decade. However, the growth trajectory of the steel industry would have its own set of challenges. The regulatory landscape in the metals & mining industry is becoming stringent due to geopolitical developments, changing trade patterns, enhanced focus on Environment, Social and Governance (ESG) aspects. Non-adherence to such stringent regulatory ecosystem may impact business operations and reputation.

Steel being an energy intensive and hard to abate sector needs to transition towards low emission steel and the Government of India may impose taxes and penalties to drive ESG journey.

Mitigation Strategies:

Tata Steel is continuously scanning the regulatory canvas to assess the impact of changing rules and policies on its current operations and future growth trajectory.

The Company has a robust compliance and risk management system. We are committed to complying with existing laws and regulations, promoting environmental stewardship and have a policy of zero tolerance to non-compliance. Tata Steel has invested in benchmark systems and processes that are accessible for all to steer compliance and aid management of risks across the organisation.

With an aim to develop a future-ready industry, the Company is investing in Research & Development for Technology transformations, digitalization, capacity building and development of resources while adhering to the principles of social and climate justice as a proactive approach towards regulatory compliances. We are committed to net zero by 2045 in our decarbonisation journey.

The Company also pursues policy advocacy with an objective to create value for all stakeholders.

Operational Risks:

The Steel manufacturing processes are vulnerable to disruptions resulting from a range of factors including rising uncertainty in extreme weather conditions, natural disasters, equipment failures. Further, TSUK has specific issues of ageing assets. Such disruptions have the potential to impact the Companys operations, safety and customer service levels, warranting appropriate risk management strategies to mitigate their potential impact.

Mitigation Strategies:

The Company has endeavoured towards adopting advanced maintenance practices for enhanced plant availability and reliability. A dedicated team analyses benchmark practices to develop state-of-the-art Asset Management and Diagnostic Centre (AMDC) for implementing predictive analytics to implement the concept of smart connected plant. The robust digital ecosystem enables real-time shutdown management for optimal co-ordination and improved asset reliability across the steel value chain. The Company has invested in state-of-the-art equipment and processes. Various plants, including Tata Steel Jamshedpur, Kalinganagar and the IJmuiden Plant in the Netherlands, have been recognised as Advanced 4th Industrial Revolution Lighthouse by the World Economic Forum. At Tata Steel UK, capital expenditure on replacing ageing assets beyond end of life is being carried out through a risk-based process, wherein assets at a higher risk of operational and safety failure are prioritised. Additionally, preventive maintenance through close monitoring of assets is being done.

The growing geopolitical situations and instances of supply chain disruptions have further aggravated the uncertainty in availability of spares which have dependence on single geography/vendor partner or have limited alternatives. Hence the focus has been on indigenisation of spares to achieve self-reliance and to digitalise the process to maintain optimised inventory. The indigenisation initiative is aligned to the ‘Make-in-India focus and encourages the vendor partners to supply supreme quality spares and benchmark lead times.

We are cautious of the growing uncertainty in weather patterns leading to extreme heat and heavy rainfall. To ensure our employees safety and business operations continuity, we have developed a detailed disaster plan and standard operating procedures to respond to natural disasters, epidemics/pandemics, and extreme weather events.

Safety Risks:

Steel industry is inherently prone to hazards a ecting workforce health and safety which may adversely impact business continuity and reputation. This is further aggravated with the geographical expansion and diversi cation of our business and operations that faces various stringent safety laws & regulations.

Mitigation Strategies:

With the motto of ‘Committed to Zero, we have remained steadfast to our belief of safeguarding people and maintaining business continuity. To meet this target, the Company has continuously fortified the Safety Management and Governance mechanism, built a safety focused culture across business operations. A robust risk management framework is in place and continuous e orts have been put to improve the risk visualisation among workforces. Improving behavioural safety of the workforce at workplace through experiential learning and focus on dissemination of safety standards has been the key to improve risk perception.

Tata Steel has institutionalised business continuity management through development of Tactical centre for response to any major onsite emergency and developed Centre of Excellence (CoE) in Process Safety Management to deploy standardised process safety management across the organisation. The Safety theme park was developed to train employees and promote safety at all touchpoints. Safety Excellence Reward and Recognition framework has been extended beyond Managerial positions and vendor partners for demonstrating safety commitment and promoting a culture of safety in the organisation. Further, Tata Steel stresses upon the capability development & training of all stakeholders such as employees, vendor & business partners, trainees at regular intervals. Practical Safety Training Centre has been developed with a purpose to improve the risk perception of the workforce on various critical hazards. Here, hands-on training is imparted on di erent modules such as Working at Height, Material Handling, Gas Safety, Con ned Space, Heavy vehicle simulators, First Aid & Cardiac Pulmonary Resuscitation (CPR), and Virtual Reality for moving machinery.

Various campaigns such as ‘National Road Safety Month and those related to mitigation of risks associated with top hazards were undertaken. Deeper introspection on road safety practices, reaching beyond the Company premises, systematically introducing technological interventions on roads and vehicles, and connecting with all the road pilots on one-to-one basis improved the risk perception and behaviour. Additionally, focused Campaigns such as ‘Slip Trip Fall, ‘Working at Height, etc. to identify the hazards and its risk mitigation by risk hierarchy of control philosophy reinforced safe behaviour among employees and contract employees.

Workplace Safety & Process Safety Management in Tata Steel have matured over the years through adoption of various robotic & technological solutions. Digital platforms have been continuously enhanced to address and mitigate key concerns. Some of the examples are, introduction of new Robotic System for Wagon Tippler II operations, to eliminate man-machine interface during the coupling of wagons & hereby improving safety. In Raw material locations, rede ning core mining processes such as exploration and mine planning using drone data and adequate analytics demand fewer on-foot exploration requirements and hereby improving site safety. Some of the future ready infrastructures are deployed such as digital enablers including CCTV surveillance, man-less weighbridge, paperless despatch, and automated boom barrier to augment safety and augment operational e ciency.

Controlled implosion of two obsolete coke plant chimneys and a Coal Tower was safely carried out at Tata Steel Jamshedpur Works using the latest technologies which corroborates the Companys excellence in safe execution of job. At Tata Steel European operation, Time Out for Safety campaign rolled out across all employees and core contractors in the UK. Positive feedback and impact since start formed increased level of engagement.

Community Risks:

We have always fostered a business model and social context that is shared with communities and ultimately aims for a significant improvement in quality of life, prioritising marginalised communities proximate to our operating locations. Moreover, there is a growing pressure from local communities proximate to our coal based manufacturing facilities in Europe over emissions. This is fostered through consistent and transparent dialogue, understanding of vulnerabilities, recognition of aspirations and appreciation of cultural nuances of communities. An erosion of trust with communities will slow down societal impact and lead to consequent loss of reputation or business continuity.

Mitigation Strategies:

Tata Steel anchors one of the deepest and most diverse societal development e orts based on a combination of programmes and platforms addressing core development challenges for over 3.15 million lives directly every year. The Company adopts a Board led strategic approach to deepening trust and commits talent and resources through the Tata Steel Foundation for enabling dialogue with marginalised communities, creating a felt understanding of their perspective and societal impact through four pathways – (a) nationally relevant change models which have been built to address core development challenges over several years resulting in more than 2,400 habitations being declared child labour free zones, 40% decline in maternal and child mortality rates in remote tribal regions and several tribal languages of the country nding expression through more than 30,000 learners every year; (b) regional change models for lasting betterment in well-being of communities which recognise the specific nuances of Eastern India in solving for challenges like community led water conservation e orts yielding more than 45 million cubic feet of recharge capacity in key watersheds, more than 4,000 students trained in vocations based on localised aspirations and a platform for persons with disability which has now brought an entire block towards 100% access to entitlements; (c) embedding a societal perspective in business decisions, for which more than 600 business school students and 50 management personnel have undergone a social immersion designed to learn from communities and enhance a sense of purpose across management in the Company and the first completely tribal batch of apprentices were taken on this year and (Rs.) impact ecosystems based on thought leadership, which builds on the experience and capability of societal impact to bring in more partners in progress for regions and communities who need greater attention and thinking.

The key driver of this approach are multiple structured forums for dialogue with communities which are convened periodically to discuss and co-create a shared impact agenda, including replicating the same processes and impact across new locations. The Company, also, has a portfolio of products which is aimed at addressing societal challenges such as a ordable housing and farm income enhancement, while key business processes are also designed to have a clear diversity and a rmative action perspective. Tata Steel Thailand is one of the first 30 companies that joined UNICEF in Child Friendly Business in ‘The Children Sustainability Forum to make a commitment in protecting childrens rights. Tata Steel Europes Community Partnership Programme ‘Future Generations, with sub-themes of education, environment, health, and well-being, works across the UK, assisting job and wealth creation by supporting small and medium businesses with nance and business premises. Tata Steel Netherlands is actively pursuing measures through Roadmap+ programme to reduce emissions such as nitrogen oxide, dust deposition, polycyclic aromatic hydrocarbons, heavy metals, lead, particulate matter, etc. to address health concerns of IJmuiden communities and support local initiatives.

Our e orts have been recognised across national and global platforms including the National CSR Award for Excellence in CSR as well as Contribution to Education from the Ministry of Corporate A airs, India.

Commodity Risks:

Coal, iron ore and other bulk commodities contribute to a major part of the operating costs of Tata Steel and their sourcing is concentrated in specific geographies. Geopolitical developments coupled with changes in market dynamics not only pose a risk to raw material availability but also have an adverse impact on sea freights. The volatility in Raw Material prices is also leading to cost escalation and major changes in working capital/cash ow position. Price volatility and supply chain risks are expected to continue in the coming year considering the geopolitical events, weather disruptions, continued Russia-Ukraine con ict, exchange rate movements and energy crisis.

Volatility in prices of process consumables has a significant impact on the input costs of steelmaking as observed in the past few years. Few of the commodities also have a high/complete dependence on a single geography which poses a potential risk of supply disruption with adverse price impact.

Changes in statutory and sustainability norms in importing/exporting countries pose a threat to the supply chain in the near term.

Mitigation Strategies:

Steel prices have a significant correlation with raw material prices. Changing prices of coal and iron ore generally re ect through adjustments in steel prices, which in e ect acts as a natural hedge against volatility. However, there may be a lead and lag involved and hence several steps are being taken to manage the price volatility. In addition, the Company has implemented group-wide hedging using financial instruments. Price forecasting tools are being used for commodities like Coal, Zinc, Aluminium, etc. to understand price movements and to time the buy for optimising costs. Tools like reverse auctions are being used for e cient price discovery for commodities like coal, ferro-alloys, refractories, etc.

Coal sourcing is being diversified – sourcing being established from countries like Indonesia, USA, and Canada in addition to Australia. This coupled with the trial of new grades of coals/use of weak coals with better Value in Use will ensure the availability of coal to meet the plant requirements and reduce the cost of sourcing. Long-term tie-ups with suppliers in Australia will keep prices competitive with an improved reliability.

Indigenisation has been identified as one of the major levers to de-risk the supply chain for both direct and indirect commodities which are dependent on import sources. Where indigenisation is not possible, alternate country sourcing beyond China or development of substitute products is also being explored.

Sustainable procurement policy is being deployed to engage with suppliers/service providers to take initiatives in the areas of ‘reduce, recycle, and reuse and foster responsible supply chain policy.

Risk assessment for key vendors is also undertaken to assess the capability of vendors in meeting the supply requirements.

Supply Chain Risks:

Tata Steel has one of the industrys rather unique and complex value chains extending from mining to steel. Thus, the scale and complexity of operations pose several risks including the timely movement of key raw materials from captive mines and imported raw materials from ports to consuming plants and thereafter the movement of finished goods from plants to customers in India/ Europe and export markets.

The supply chain network is subjected to physical and environmental destructions, trade restrictions due to geopolitical tensions and disruptions at suppliers. Additionally, our dependency on common logistics infrastructure resources like ports and Indian Railways that are constrained in terms of capacity & availability may lead to logistics related disruptions.

Around 40% of Indias steel capacity is concentrated in Eastern India (where majority of our plant facilities are located), whereas the consumption points are largely in the North, South, and Western parts of India. Thus, the common logistics infrastructure resources like ports and Indian Railways are constrained in terms of capacity & availability and our dependence on these bring the risk of logistics-related disruptions. Events like the power crisis puts rake availability under stress. The rake crisis has also a ected the metallics circuit as more rakes are getting diverted to the thermal coal & iron ore-pellet exports circuit. The statutory norms are also getting stringent and there is an emerging need to address Environmental, Social and Governance (ESG) issues to sustain business in the long run. Given the long-term growth plan of Tata Steel, some of these risks may get further aggravated, hence seeding strategies for mitigating the same have been put in place.

Mitigation Strategies:

While Tata Steel supply chain is complex, it also provides opportunities for value maximisation through global optima. The division works in synergy with all other divisions with an overall focus on reliability for all sites on Integrated Margin Management (IMM) principles. Tata Steel has adopted a hedging strategy in addition to the long-term contracts to keep sea freight spend in check. Also, actions are being taken to reduce demurrage and sub-optimal costs through route optimisation. We have also entered into long term partnership agreements with major ports like Dhamra and Paradip (KICTPL- Kalinga International Coal Terminal Private Ltd.) to de-risk import supply chain. A new port infrastructure is being developed in the East Coast of India (i.e., Subarnarekha Port) to support the import requirements for its long-term steel capacity growth plan (40 MnTPA) in India by 2030.

To remove reliance on Indian Railways, we have invested in private freight train schemes- GPWIS (General Purpose Wagon Investment Scheme) and SFTO (Special Freight Train Operator). The GPWIS and SFTO rakes currently carry 22% of raw materials and 11% of Finished goods respectively and their deployment is being steadily increased. Further, the slurry pipeline project for iron ore transportation from captive mines to plants is in progress to provide an alternate mode of transportation to Indian Railways.

We are one of the few companies to measure end-to-end Scope3COFFemissionsinallmodesoftransportation.Further, the Scope 3 measurement system is being strengthened through engagement with experts and digital interventions. An alternate fuel-based eet has been deployed in road and sea transportation to reduce Scope 3 COFF emissions. Tata Steel has deployed around 69 CNG/LNG/Electricity based vehicles in short lead road circuits and the number of vehicles will be doubled in FY2023-24. A total of 7 import shipments have been done in FY2022-23 using biofuels/

LNG and the same is being increased to 28 shipments in FY2023-24 (corresponds to 13% of total sea cargo movement to India). Our critical vendors are assessed annually on Responsible Supply Chain Policy (RSCP) framework and continuous improvements are undertaken based on the ndings.

Information Security Risks:

The Companys operations significantly rely on IT and digital infrastructure. The organisation has made several investments on digital transformation for important and complex processes. One of the key attributes of Digital transformation journey is the connected Architecture i.e., B2B integrations, Information Technology (IT) & Operating Technology (OT) integration channels for Artificial Intelligence (AI), Remote operations which brings many benefits, such as increased e ciency, better decision-making, and improved operational performance. However, these integrations also may increase the organisations exposure to cyber risk.

Data privacy laws and regulations are in place to govern the data privacy and protection requirements. Non-compliance to IT legislations and regulations may lead to imposition of penalties and adverse impact on Companys reputation.

Mitigation Strategies:

Tata Steel has implemented advanced security measures such as strong access controls, Next Generation Firewall, Advanced Threat Protection, End Point Detection & Response to give real time detection capabilities based on behaviour, lateral movements.

Integrated IT & OT Security Operation Centre has been implemented to give near real time visibility of security events generated on systems to identify abnormalities with immediate trigger to mitigation actions. 24*7*365 external attack surface management has been set up to identify potential risks over internet and try out exploits in attackers perspective which helps to take immediate mitigation before being identified and utilised by attackers.

Tata Steel regularly assesses cybersecurity posture and conduct security audits to identify potential vulnerabilities. The same security initiatives are being extended to Tata Steel Group Companies (TSGCs) and has implemented Security information and Event management as core fundamentals of Security Operation Centre in various TSGCs. Zero Trust Architecture is also being implemented for TSGCs.

The Company has implemented various policies and procedures to ensure data privacy. Proactive software asset management is being carried out to ensure compliance.

XI. Internal Financial Control Systems and Internal Audit

The Company has an Internal Financial Controls (‘IFC) framework, commensurate with the size, scale, and complexity of the Companys operations. The Board of Directors of the Company is responsible for ensuring that IFC have been laid down by the Company and that such controls are adequate and operating efectively. The internal control framework has been designed to provide reasonable assurance with respect to recording and providing reliable financial and operational information, complying with applicable laws, safeguarding assets from unauthorised use, executing transactions with proper authorisation and ensuring compliance with corporate policies. The Companys internal financial control framework commensurates with the size and operations of the business and is in line with requirements of the Companies Act, 2013. The Company has laid down Standard Operating Procedures and policies to guide the operations of each of its functions. Business heads are responsible to ensure compliance with these policies and procedures. Robust and continuous internal monitoring mechanisms ensure timely identi cation of risks and issues. To make the controls more robust and comprehensive, IFC standardisation & rationalisation project was undertaken in FY2020-21 which has ensured comprehensive coverage cutting across all functions of the Company. In order to reduce manual time and e orts involved in control testing, improve con dence in testing results, increase the frequency of testing and resort to full checking of the data as compared to sample testing, automation of controls was undertaken in FY2021-22, whereby around 30% of the controls were automated which have been tested in automated environment in the current financial year. The management, statutory auditors and internal auditors have also carried out adequate due diligence of the control environment of the Company through rigorous testing.

The Company has deployed SAP Governance, Risk and Compliance (GRC) Module and other IT platforms to keep the IFC framework robust and our Information Management Policy governs these IT platforms. IFC has been documented and embedded in the business processes and such controls have been assessed during the year under review and no material weaknesses were observed.

The scope and authority of the Internal Audit function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee. The Internal Audit team develops an annual audit plan based on the risk proffle of the business activities. The Internal Audit plan is approved by the Audit Committee, which also reviews compliance to the plan. The Internal Audit team monitors and evaluates the e cacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures, and policies at all locations of the Company and its subsidiaries. Based on the report of the Internal Auditor, process owners undertake corrective action(s) in their respective area(s) and thereby strengthen the controls.

Significant audit observations and corrective action(s) thereon are presented to the Audit Committee and shared with the Statutory Auditors. The Audit Committee at its meetings reviews the reports submitted by the Internal Auditor. The Audit Committee also, at frequent intervals, has independent sessions with the statutory auditor and the Management to discuss the adequacy and eFectiveness of IFCs.

XII. Statutory Compliance

The Company has in place adequate systems and processes to ensure that it is in compliance with all the applicable laws. The Company Secretary & Chief Legal Officer (Corporate & Compliance) is responsible for implementing the systems and processes for monitoring compliance with the applicable laws and for ensuring that the systems and processes are operating efectively. The Chief Executive Officer & Managing Director, places before the Board, at each meeting, a certi cate of compliance with the applicable laws. The Company Secretary & Chief Legal Officer (Corporate & Compliance) also confirms compliance with Company law, SEBI Regulations and other corporate laws applicable to the Company.