In good position to deleverage from next yr

Tata Steel is expanding capacity at Kalinganagar in Odisha, amid a challenging environment. KOUSHIK CHATTERJEE, executive director and chief financial officer, Tata Steel, tells Ishita Ayan Dutt in Kolkata that the capex spend for next year (FY26) will be lower than the current year, and it will be a good time to deleverage. Edited excerpts:

- KOUSHIK CHATTERJEE

India's economic growth in the July-September quarter slipped to a seven-quarter low of 5.4 per cent. Given the correlation with steel consumption, is it worrisome?

This is more of a cyclical deceleration rather than anything structural. The credit growth has been slower than expected and the public spending is slightly delayed because the Budget cycle got pushed due to the election this year.

But our estimate is that there will be a lot of catch-up in Q3 and Q4.

Rural consumption is showing signs of improvement and private consumption is getting broadbased. A huge amount of allocation has been done on infrastructure and the entire industry expects pick-up of public spending very significantly in the second half of the remaining financial year. How quickly we can start the capital spend on the ground will be important. But a lot of central and state government contracts are on the anvil and the pipeline is looking better than Q2.

Prices globally have been under pressure, is steel in a down-cycle?

The steel industry is clearly in a down-cycle. On an annualised basis, China is exporting about 128 million tonnes (mt), which is almost 125 per cent higher than in 2022. This level of export represents about 65 per cent of the demand in the European Union. Therefore, the supply-side glut is very high. While many countries are currently undertaking trade investigations, it is impacting prices. At these price levels, the broader Chinese steel industry is also losing money.