Tata Steel Limited · NSE:TATASTEEL
Tata Steel — Investor Day (July 2021)
72 slides from Tata Steel's investor day presentation, Jul 6, 2021
Slide 1: Investor Day 2021
<p TATA STEEL TATA '# WeAlsoMakeTomorrow INVESTOR DAY 2021 July 6, 2021 Resilient | Resolute | Future-ready
Slide 2: Agenda
AGENDA 1 Strategic Roadmap 2030 2:30pm- 6:30pm IST 2 Financial Strategy 3 Q&A Session – I ------------------ Break (4:00pm-4:15pm IST) ----------------- 4 Market Leadership and Future-fit Strategy 5 Our Approach to ESG 6 Technology and Innovation-led Transformation 7 Q&A Session – II 2
Slide 3: Safe harbour statement
Safe harbour statement Statements in this presentation describing the Company’s performance may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results may differ materially from those directly or indirectly expressed, inferred or implied. Imp
Slide 4: Strategic Roadmap 2030
1 Strategic Roadmap 2030 2 Financial Strategy 3 Q&A Session – I ------------------ Break (4:00pm-4:15pm IST) ----------------- 4 Market Leadership and Future-fit Strategy 5 Our Approach to ESG Mr. T V Narendran 6 Technology and Innovation-led Transformation CEO & Managing Director Tata Steel 7 Q&A S
Slide 5: Tata Steel is focused on creating sustainable value
Tata Steel is focused on creating sustainable value Safety remains our Become Culturally priority future ready Leadership Sustainability in India is core to our business Robust financial health Employee well being Successful integration of Net Debt/EBITDA <2.5 in Circular business models Only steel
Slide 6: Global Steel Industry witnessing structural changes
Global Steel Industry witnessing structural changes: Steel prices to stabilize at higher levels than in the last decade Capacity utilization is improving with closure China Net Exports and HRC of inefficient and polluting assets Export Prices Capacity utilisation, % (LHS) Overcapacity, MTPA (RHS) Ch
Slide 7: Strategies informed by opportunities presented by megatrends
Our strategies for success are informed by opportunities presented by megatrends Urbanization ▪ Increase in number of Megacities Demographic Change Shifting Economic Power ▪ Increasing population and the ▪ Rising economic disparities burgeoning youth population ▪ Shift in Global Economic Power ▪ The
Slide 8: Aim to be the most respected and valuable steel company globally
Over this decade, Tata Steel aims to be the most respected and valuable steel company globally Leadership in India: Most respected and preferred by discerning customers Consolidate position as global cost leader ▪ Raw material self-sufficiency ▪ Increase capacity of India operations through organic
Slide 9: Strategy pivoted around capitalizing on India Growth Story
Tata Steel’s strategy is pivoted around capitalizing on India Growth Story… Targeting value accretive growth in India India to be the dominant manufacturing base for Tata Steel going forward 2010: 22 MTPA 2020: 34 MTPA 2030F: 55 MTPA Production capacity (MTPA) 29% 57% 73% India Europe South –East As
Slide 10: Continued strong market presence
… with a continued strong market presence Attain and retain Leadership in chosen segments (current and new) ▪ Market share in ‘Automotive’ grew to 58% in FY21 from 50% in FY20 ▪ High-end engineering segment grew by 46%YoY in FY21 Reinventing the route to connect, transact and engage with customers ▪
Slide 11: Structural and operational improvements key to financial goals
Continuous structural and operational improvements key to achieve our financial goals Savings of Rs 21,400+ crores over last 5 years through Interventions planned over the operation efficiency improvement in Tata Steel India next 5 years Savings (Rs crores) 6,545 5,369 ▪ Focus on augmenting raw mate
Slide 12: Leadership position in Adjacent Businesses
We continue to focus and invest in capabilities to attain leadership position in Adjacent Businesses Services & Solutions New Material Business Commercial Mining 3 material verticals – composites, 3 chromite mines in Odisha Pravesh – Doors and windows graphene & advanced ceramics 450 KTPA of ferro c
Slide 13: Sustainability – a strategic imperative for a hard to abate sector
Sustainability – a strategic imperative for a ‘hard to abate’ sector Sustainability is now deeply …intent to demonstrate leadership position in sustainability over this decade embedded in Tata Steel Goals for 2025 Goals for 2030 ecosystem … ▪ TSI: Achieve <1.8 tCO2 /tcs Climate ▪ TSI: Achieve <2 tCO
Slide 14: Leadership in Technology and Digital
We aspire for leadership position in Technology and Digital Infrastructure and enablers in place Aspirations for this decade ✓ Identified 7 TLAs with 40+ projects ▪ Deliver ‘new to world’ products and solutions ✓ Focussed on leveraging external eco-system through outcome driven collaborations ▪ Depl
Slide 15: Becoming culturally future ready
Becoming culturally future ready will provide the platform for future value creation Strengthening enablers for Future of ‘Work’, ‘Workforce’ and ‘Workplace’ Culture of Safety, Continuous Agility, Innovation and improvement, Ethics & Giving Technology leadership back to the community Certified as In
Slide 16: Building the Tata Steel of the Future
We are on our way to build the Tata Steel of the Future ▪ Strong, non-cyclical free cash flows driving best-in-class valuations ▪ Recognized as technology & innovation leader by customers, peers, employees, investors ▪ Leadership in sustainable practices: low carbon business model at scale Most resp
Slide 17: Financial Strategy
1 Strategic Roadmap 2030 2 Financial Strategy 3 Q&A Session – I ------------------ Break (4:00pm-4:15pm IST) ----------------- 4 Market Leadership and Future-fit Strategy 5 Our Approach to ESG Mr. Koushik Chatterjee 6 Technology and Innovation-led Transformation Executive Director & Chief Financial
Slide 18: Recap of financial year 2021
Recap of financial year 2021 Deliveries (mn tons) EBITDA (Rs. crores) EBITDA (%) 29,770 30,892 20 23.88 25.27 26.79 26.68 28.50 17 19 14 12 22,045 17,025 17,735 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 Free cash flow (Rs. crores) Interest Coverage Ratio Gross Debt /
Slide 19: Pillars for Tata Steel's financial strategy
Pillars for Tata Steel’s financial strategy Maximizing Leverage return on Invested Optimize capital › Target Investment › Sector Capital structure and cost Grade Metrices, Leading Liquidity for › De-risk & Build Returns Business Disruption Portfolio Resilience Restructuring Minimize working capital
Slide 20: Balance sheet management – de-risked and resilient
Balance sheet management – de-risked and resilient Value Drivers FY 20-21 Actions FY 21-22 Priorities Net debt reduction by > US$2 billion gross debt reduction; Deleveraging ~ US$4 billion prioritize off-shore debt pre-payment Called residual Partly paid Raising Equity amount ~Rs.3,000 crores Not en
Slide 21: Capital allocation – focus on sector leading returns
Capital allocation – focus on sector leading returns Rs. 80,000 crores 82% of Investments Allocation Spend over Last 5 years in India is prioritised Running the Business Working Responsibly towards Growth (Sustenance) (License to Operate ) 1% 2% India Operations ~ 65% 22% 25% 4% of Investments in Ta
Slide 22: Portfolio management
Portfolio management Clusterization Tata Steel Investing in New European Simplification of Indian Business BSL Merger Growth Engines Business Optimisation of network Integration New Materials Separate UK & 100 entities liquidated/ and resources Netherlands merged over 2 year Cost Control Steel Recyc
Slide 23: Operational excellence through continuous improvement culture
Operational excellence through continuous improvement culture Figs in Rs. crores 5 year cost savings at Transformation programme at Tata Steel India operations Tata Steel Europe Cost and Supply chain Optimisation Overhead cost reduction 3556 6545 5369 332 2252 2177 1,916 505 1,590 960 542 755 4,298
Slide 24: Building blocks of sustainable and responsible finance
Building blocks of sustainable and responsible finance Strategic ▪ Transition to Low carbon business with pathway milestones Alignment Climate aligned Capital Allocation ▪ Carbon Pricing integral in decision making Assessment of Risk and ▪ Reporting based on TCFD Framework Opportunities ▪ Integrated
Slide 25: Pathway for future financial strategy
Pathway for future financial strategy ▪ Strong earnings and cashflow performance expected ▪ Investment Grade Financial Metrics Short-term ▪ Significant reduction in Overseas debt FY2022 ▪ Continued focus on Capital allocation and cashflow management Target Leverage Target RoIC Dividend Policy Net De
Slide 26: Sum-Up
Sum-Up Leverage Capital Allocation Industry Benchmark Initiate gradual Target Financial Management towards Growth and Return Profile Greening of Balance Metrics in line with remains an De-risking with Sheet Investment Grade Enterprise Priority additional capacity Rating 26
Slide 27: Market Leadership and Future-fit Strategy
1 Strategic Roadmap 2030 2 Financial Strategy 3 Q&A Session – I ------------------ Break (4:00pm-4:15pm IST) ----------------- 4 Market Leadership and Future-fit Strategy 5 Our Approach to ESG Mr. Peeyush Gupta 6 Technology and Innovation-led Transformation Vice President Steel Marketing & Sales 7 Q
Slide 28: Global steel industry four key structural changes in 2020
Global Steel Industry has witnessed four key structural changes in 2020 Crude Steel Output & Utilization (mn tons, %) Total World Exports (%) 120% 470 85% 85% 457 439 401 400 460Others 82% 81% China 100% 450 77% 76% India 78% 77% World 80% 440 51% 51% 51% 48% 430Turkey 75% 73% ROW 69% 60% 420Germany
Slide 29: Indian steel industry significant developments in 2020
Indian Steel Industry has also witnessed four significant developments in 2020 Crude Steel Output & Utilization (mn tons, %) Steel (Finished + Semis) Net Exports (mn tons) 60% 63% 63% 64% ISP (% Share) 17.4 SSP 14.0 (% Share) 11.2 40% 37% 37% 36% 8.8 Crude Steel 7.2 5.0 5.0 200 Capacity (Mn 8.5 150
Slide 30: Tata Steel caters to ~87% of domestic market
Tata Steel caters to ~87% of domestic market and has a unique way of segmenting the market Sector-wise India steel demand Tata Steel: Sector-wise domestic sales (FY21, 94.1 mn tons) (FY21, 13.7 mn tons) 7% 6% 2% Construction Construction 1% Capital Goods 7% Capital Goods 26% Automotive Automotive 46
Slide 31: Track record of superior growth compared to the market
Demonstrated track record of superior growth as compared to the market…with consistent and strategic exports since 1988 150 24 Tata Steel domestic sales (mn tons) [FY10-FY21 CAGR: 8.1%] (RHS) Tata Steel export sales (mn tons) (RHS) 20 120 India market demand (mn tons) [FY10-FY21 CAGR: 4.3%] (LHS) 99
Slide 32: Market leadership enabled by capacity, brand and de-commoditization
Market leadership enabled by capacity enhancement, brand rejuvenation and de-commoditization 60% 54% 45% 51% 58% 40% 62% 1 in every 3 52% 1 in every 2 LPG 472 outer panels of 2779 55% 53% 2002 cylinders in India 49% 62% cars 1911 1873 293 411 434 349 365 195 172 2 in every 3 90 93 71 68 2 in every 3
Slide 33: Leadership initiatives across customer groups
Leadership initiatives across customer groups B2B: Customer engagement & investment in technology B2C: Delivering superior Multiple routes to connect, experience on multiple points transact & engage of “friction” Services & Solutions: “Serving B2ECA: Developing long term Consumers better” & “Extend
Slide 34: Multiple routes to market
Leadership Enabler – 1: Tata Steel has designed multiple routes to market to connect, transact and engage with customer groups and enabled digitally Marketing & Sales Channel Partners and corresponding customer groups 6 Hubs1 and 14 spokes2 Tata Centre Direct (Corporate Route B2B 50+ Product Applica
Slide 35: B2B: Customer engagement and investment in technology
B2B Leadership Enabler – 2: Customer engagement and investment in technology Advanced Technical Support Investment in Assets Δ Value Analysis & Value Engineering § Investments in new facilities: JCAPCPL, 2 3 TSK CRM § Early Vendor Involvement for new launches § Extensive network of steel processing
Slide 36: B2ECA: Long term partnership through micro-segmentation
B2ECA Leadership Enabler – 3: Developing long term partnership through micro-segmentation and delivering delight to SMEs Customer Engagement Creating differentiation Δ Ecafez initiatives § Making customer smile 2 3 § Forum of industry experts § DIGECA: Enquiry management and analytics B2ECA 1 4 Micr
Slide 37: B2C: Superior consumer experience
B2C Leadership Enabler – 4: Delivering superior consumer experience on multiple points of “friction” Providing convenience Creating differentiation Δ Customized solutions: Tiscon § Ask Expert Superlinks 2 3 § Tata Tiscon – 600 MPa, Graphene coated § Aashiyana : B2C platform B2C 1 4 Generating Awaren
Slide 38: S&S: Serving Consumers better and Extend Differentiation
S&S Leadership Enabler – 5: “Serving Consumers better” and “Extend Differentiation” Business Context Some of our S&S Challenge of improving offerings profitability Tata Pravesh Doors Tata Pravesh Windows Raso-e – Modular kitchen MobiNest-Portable cabins Narrowing Product Differentiation AquaNest – C
Slide 39: Our Approach to ESG
1 Strategic Roadmap 2030 2 Financial Strategy 3 Q&A Session – I ------------------ Break (4:00pm-4:15pm IST) ----------------- 4 Market Leadership and Future-fit Strategy 5 Our Approach to ESG Mr. Sanjiv Paul 6 Technology and Innovation-led Transformation Vice President Safety, Health & Sustainabili
Slide 40: Sustainability at Tata Steel: The Tata Ethos
Sustainability at Tata Steel The Tata Ethos In a free enterprise, the community is not just another stakeholder in the business but in fact the very purpose of its existence We do not claim to be more unselfish, more generous or more philanthropic than other people. But we think we started on sound
Slide 41: Sustainability Pillars
Our sustainability framework provides guidance for developing and deploying sustainability initiatives across our value chain Our sustainability framework Our approach Vision We aspire to be the global steel industry benchmark for Sustainability Policy Value Creation and Corporate Citizenship Sustai
Slide 42: Climate Change
Our carbon footprint is best in class in the geographies we operate in, and our long term decarbonization roadmap is aligned with national commitments Key Enablers Performance Over the Years Way Forward TSI Emission Intensity (tCO2/tcs) TSE Adoption of BAT 3.12 Maximizing scrap use 1.96 1.99 TSI: Ac
Slide 43: Water
Water is a material issue for Tata Steel India, and we have reduced our specific water consumption by more than 50% in last 15 years Key Enablers Performance Over the Years Way Forward Focus on 4-R Reduction in 66% 46% 52% Fresh Water at Tata principles (Reduce, at TSJ at TSK Steel India Achieve spe
Slide 44: Dust Emissions
We have made significant improvement in air quality in the geographies we operate in Key Enablers Performance Over the Years Way Forward Reduction in 75% 62% 58% Specific Stack at Tata at TSJ at TSK Continuous upgradation Steel India Dust Emission since 2005 since 2017 since 2005 Dust Emissions of A
Slide 45: Circular Economy
Adoption of circular economy principles for efficient use of resources Key Enablers Performance Over the Years Way Forward Use of by products in TSI Material Efficiency (%) value added applications ~7% ~9% ~10% FY17 100% steel making slag FY18 100 100 100 100 Achieve 99 % Circular Economy 99 98 97 9
Slide 46: Biodiversity
Conservation and restoration of biodiversity is integral to our raw material operations Key Enablers Key Results Way Forward ▪ One of the first companies in India to have a Biodiversity Policy Collaboration with IUCN ▪ All our Raw Material locations have Biodiversity Management Plan for developing B
Slide 47: Product Sustainability
Committed to reduction of environmental footprint of our products using Life Cycle Approach Key Enablers Key Results Way Forward TSI ▪ Developed GreenPro framework for steel rebars in Collaboration with CII GBC (1st time in India) Product Sustainability Increase in coverage of Disclose environment ▪
Slide 48: Responsible Supply Chain
Committed to building a sustainable & resilient supply chain by proactively engaging with our supply chain partners Key Enablers Key Highlights Way Forward TSI: ▪ >200 critical suppliers assessed on RSCP in FY21. Another 400 Release of Responsible to be covered in FY22 (covering 58% of total procure
Slide 49: Occupational Health and Safety
Zero harm is highest priority for Tata Steel Group Key Enablers Performance Over the Years Way Forward TSI LTIFR TSE LTIFR 79% 44% 3 Reduction Reduction Achieve Zero Harm 2.84 Build (safety) Through leadership capability 1.53 1.45 1.71 1.59 1.15 Reinforce positive 0.56 0.57 0.64 0.23 0.43 Occupation
Slide 50: People Care
Fostering a culture of people care Key Enablers Key Highlights Way Forward Employee Engagement Scores Women in Workforce (%) Deliver best in class 10.6 11.1 11.1 11.2 11 experience and build a 78 TSL 6.1 6.5 6.9 7.4 (Stand unique employer 76 5.8 alone) brand TSE Sustain Best 74 72 Workplace in FY17
Slide 51: Corporate Social Responsibility
Working with communities to address their most pressing development challenges Key Enablers Performance over the years Way Forward 1.6 Million lives reached CSR spend consistently through CSR initiatives (FY21) beyond statutory mandate Corporate Social Responsibility Large scale, replicable CSR actu
Slide 52: Standing with the nation during COVID-19 pandemic
Standing with the nation during COVID-19 pandemic 16.5 lakh 15,000+ Lives Reached out Hours of Volunteering (Figures updated till May 2021) Medical Support (COVID care facilities)* › 1,187 beds at Jamshedpur Liquid Medical Oxygen › 150 beds at Kalinganagar › 61,000 tonnes Liquid › 500 beds at Jajpur
Slide 53: Governance: Demonstrating Leadership with Trust
Governance: Demonstrating ‘Leadership with Trust’ CSR & Nomination and Audit Sustainability Remuneration 50% 10% Board Independent Woman ~100% Board Committees Risk Attendance Safety, Health Stakeholders’ Directors Directors Management Oversight and Environment Relationship ▪ ABAC ▪ Climate Change ▪
Slide 54: Efforts recognised globally and nationally
Our efforts are recognised globally and nationally TSL and TSE recognised as Safety & Health Excellence Recognised as the ‘Sustainability Recognition 2020 for world's most ethical Champions’ by Digitalisation of Process companies for the worldsteel (4th Safety Performance 10th time by time in a row)
Slide 55: Technology and Innovation-led Transformation
1 Strategic Roadmap 2030 2 Financial Strategy 3 Q&A Session – I ------------------ Break (4:00pm-4:15pm IST) ----------------- 4 Market Leadership and Future-fit Strategy 5 Our Approach to ESG Dr. Debashish Bhattacharjee 6 Technology and Innovation-led Transformation Vice President Technology & New
Slide 56: Architecture for discussion
Architecture for discussion Invest in technology Research and development technology is deep rooted in Tata Steel’s legacy 6 1 Leverage the broader The progress continues ecosystem through open culminating in Intellectual 5 2 innovation involving start-ups, Property, recognition and academia, Govern
Slide 57: Technology has always been at the heart of Tata Steel
Technology has always been at the heart of Tata Steel Developed steel grades for light armour vehicles Supplied steel for Howrah bridge (1943) during second world war (1940) Tata Steel documented its first patent in 1938 – a Tata Steel was the first in Asian steel sector to set first for the Indian
Slide 58: Progressing towards a knowledge-intensive organization
Progressing towards a ‘knowledge-intensive’ organization 115 119 114 109 • 32% of patents are in 79 79 the domain of raw 70 70 59 60 58 materials while 25% 54 54 74 are in the area of products. 55 56 47 49 44 • No. of patents filed with 35 37 37 33 35 collaborators – 10% of total patents filed FY-10
Slide 59: Consistently recognized in innovation
Consistently being recognized in the space of innovation 2020 | 2019 | 2018 2020 CII Industrial Intellectual Innovista Property Award - most number of awards for the Best Patents Portfolio in the Large every year for last 3 years Enterprises (manufacturing/engineering) category 2019 2015 CII Industr
Slide 60: Unlocking and monetizing knowledge and intellectual property
Unlocking and monetizing knowledge and intellectual property Utilizing waste Iron Dhurvi Gold powder for value - use of steelmaking added use in cutting slag as a soil tools, food fortification Incubating conditioner and metal injection Intellectual moulding Property Monetizing Internal Expertise an
Slide 61: Technology leadership areas (TLAs)
Technology leadership areas (TLAs) – 7 identified Use of low-quality Iron ore, coal, Technologies for generation ferro alloy minerals with focus on (i) /usage of large scale & Technologies for Water Use of AI to drive process Mining (ii) Beneficiation & economical green/blue H2 in neutrality through
Slide 62: Utilizing low quality raw materials – energy materials
Utilizing low quality raw materials – early steps in the domain of ‘energy materials’ while working on traditional issues Exploring Chromite overburden to extract Nickel and Cobalt for use as a Manganese group of mines cathode material in Li-ion battery Nickel Mixed Hydroxide Sulphate Product Cobalt
Slide 63: CO2 capture & utilization and hydrogen rich gas
CO2 capture & utilization and generation of Hydrogen rich gas Carbon 5 ton per day CO2 capture plant Capture commissioned at Tata Steel and Jamshedpur – a ‘first in India’. Captured Utilization CO2 utilised in the steel melting shop. Tata Steel in collaboration with a start- up company has developed
Slide 64: Mobility – advanced technical support and solutions
Mobility – providing advanced technical support and solutions to customers Services to a Japanese car manufacturer: Localized the tear down activities. 1st in India by an steel company. VAVE/EVI - 1st in India Participating in by any steel company. Hyperloop. Developing More than 75 models steel com
Slide 65: World leading solutions for clean water and coatings
World leading solutions for clean water and coatings Water Coatings A patented technology which uses Ultraviolet ‘First in the World’ Ready-To-Paint (RTP) rays to permanently oxidize cyanide present coating developed for cold rolled and in industrial waste water into carbonate and galvanised steel.
Slide 66: New materials play to capitalize on future opportunities
New materials play to capitalize on future opportunities Drivers ▪ Emerging trends in the area of light weighting and environmental sustainability ▪ Emergence of multi-material play – meet future needs of existing segments while adding new ones ▪ Counter cyclicality of steel business Composite Medic
Slide 67: Composites business
Composites business – aiming for leadership in industry, infrastructure, railways and automotive applications Value Light weight Corrosion resistance Flexibility in forming proposition enabling fuel efficiency enabling longer life lowering manufacturing capex Tata Steel in collaboration with a Spani
Slide 68: Graphene business and medical materials
Graphene business – one of the largest production plant in the world Medical materials – initiating with bone and skin replacement materials Graphene business ▪ 50 patents across 10 countries ▪ Patent protected manufacturing technology ▪ Graphene doped and coated products commercialized in three sec
Slide 69: Leveraging internal and external ecosystem
Leveraging internal and external ecosystem Internal ecosystem Revenue expenditure Planned expenditure for next 5 years (Rs. Crores) (Rs. Crores) 115 279 68 M.TECH EMPLOYEES PHD FY21 220 Capital 1,200 FY22 Plan 275 Revenue 1,500 External ecosystem Tata Steel Chair Professor Umbrella Memorandum of Tat
Slide 70: External ecosystem – plugging in the start-up community
External ecosystem – plugging in the start-up community Start-ups scouted Across 9+ geographic areas 300+ Practise areas identified Ecosystem partners Spanning across the area of collaborated with Including 11+ incubators, 5+ Sustainability, Operational Efficiency, Energy and, 7 CREATING A 24+ ventu
Slide 71: Summary
Summary Building on a strong technology legacy And shaping the future through research, technology and knowledge 71
Slide 72: Investor relations contact
Investor relations contact Institutional investor enquiries : Sandep Agrawal Email: Sandep.agrawal@tatasteel.com 72