This company of Ratan Tata decides to cut costs by Rs 115000000000, the company is…, will focus on…

India.com

19-05-2025

Tata Steel, a company under the Tata Group, has announced a cost-cutting initiative. Executive Director and CFO Koushik Chatterjee revealed that the company wants to achieve cost reductions of Rs 11,500 crore by controlling manageable expenses in various geographic regions.
Cost-cutting usually means reduction in unnecessary expenditures and improving profitability and operational efficiency. In an interaction with analysts, Koushik said that he will review the company's cost transformation program across different regions to assess progress and set targets for the next 12-18 months.
The structural cost takeout across all entities of Tata Steel during FY25 was about Rs 6,600 crore focusing on fixed cost takeout, efficiencies in manufacturing, procurement, raw material optimisation with leaner coal blends and fixed overheads, he said.
'Looking ahead to FY2026, our focus continues to be on controllable factors, and we are targeting further cost takeouts of almost Rs 11,500 crores, roughly about Rs 1.3 billion across geographies by focusing on controllable costs,' the CFO said.
The statement has come at a time when the company is expanding its Kalinganagar plant capacity to 8 million tonnes amid transition to green steel making processes in the UK and the Netherlands.
In the two foreign markets, the company has already announced job cuts.
In Q4 FY25, Tata Steel reduced expenses to Rs 54,167.61 crore from Rs 56,496.88 crore in the year-ago period. The company has also posted an over two-fold increase in consolidated net profit at Rs 1,200.88 crore in the March 2025 quarter.
Speaking further on cost takeouts, Koushik said that in India, the company intends to deliver savings of Rs 4,000 crore by focusing on operating KPIs (key performance indicators), employee productivity, supply chain optimisation, coupled with investment in projects with low payback period. There is a specific focus on conversion cost, and aim is to optimise conversion costs by about Rs 1,000 – 1,200 per tonne.
In the UK, Tata Steel intends to continue progressing on achieving a lean structure by further reduction in fixed costs of 29 per cent YoY of around 220 million pounds. Key levers range from optimising the cost of substrate and upgradation of IT infrastructure to reduce corporate overheads and rationalisation of downstream operations to improve the profitability.
'Our total fixed cost in FY2024 was about 995 million pounds, which reduced to about 762 million in FY2025 pounds, and we target to bring it to around 540 million pounds in the next financial year,' he said.
The company has secured 500 million pounds support from the UK government for the transition to scrap-based electric arc manufacturing.
(With Inputs From PTI)