Though there are supply-side and inflationary pressures, the demand levers across sectors for both business-to-business (B2B) and business-to-consumer (B2C) will remain robust in India, says N Chandrasekaran, chairman of Tata Group.
The front-ended infrastructure spending by the government including National Infrastructure Pipeline presents huge opportunities for growth in the medium and long term, Chandrasekaran says while addressing the shareholders at the Tata Steel AGM.
"We expect that in the coming decade India will witness significant investment-led growth which will be steel intensive and require significant capacity growth in India. The government has been taking industry-specific policy measures to tackle inflation which we hope would be short-term measures," he says, adding that the steel industry in India is globally competitive and therefore the companies should expand capacity in value added steel products for both "Make for India" and "Make for the world".
Chandrasekaran says that the Russia-Ukraine war and the resulting geopolitical tensions and trade disruptions have destroyed the optimism and led to rising commodity and energy prices and supply shortages globally.
"As commodity and energy prices remained elevated, the global inflation surged beyond 7.5%, indicating stagflationary headwinds which are expected to dampen global GDP this year. As the Inflationary pressures continue to intensify, major central banks are withdrawing liquidity support and raising policy rates at a faster pace than previously anticipated. Global growth for the current year is expected to decelerate to 2.9%," he says.
He said that it is a defining moment in history where the steel industry can leverage its competitive position and export its products globally to not only earn foreign exchange but also provide opportunities for capital formation in India, provide employment and allow Indian companies to invest in sustainable technology and create value for the long term.
Tata Steel is focused on generating free cash flows through tight working capital management and disciplined capital allocation during the year to record its highest-ever free cash flows of ₹27,185 crore, he says. "The company continued to focus on its deleveraging targets and made rigorous efforts towards repayment of debts. During fiscal 2022, the company's net debt reduced by 32% to ₹51,049 crore," he adds.
The board had recommended a dividend of ₹51 per fully paid-up equity share and ₹12.75 per partly paid-up equity share, translating into the highest ever dividend payout in the company's history. It also recommended the sub-division of equity shares in a 10:1 ratio.