Tata Steel, which posted a consolidated net loss at Rs 1,095.7 crore for the quarter ended March 2020, has said that it may cut its capital expenditure by half for the present financial year as it refocuses on conserving cash.
"Last year, we had a capex of Rs 9,500 crore. For this year, the capex will be cut by 50 percent, if not more," said Koushik Chatterjee, Executive Director and Chief Financial Officer, while addressing a media call.
"The COVID-19 outbreak has led to an unprecedented health crisis and has disrupted economic activities and global trade while weighing on consumer sentiment. Consequently, global steel demand is expected to be sharply lower in 2020 before a meaningful recovery in 2021," Tata Steel had earlier said in a statement.
The steel major is not alone in trying to conserve cash. Its domestic peer JSW Steel had also cut its capital expenditure for FY 21. The company has reduced its capex to Rs 9,000 crore from the earlier guidance of Rs 16,340 crore.
This was the second consecutive cut on the capex. In FY 2020 too, JSW Steel had reduced the expenditure, to Rs 11,000 crore from Rs 15,700 crore announced. The company ended up spending Rs 10,200 by the end of the 2020 financial year.
Capacity utilisation improves
TV Narendran, Tata Steel's CEO & Managing Director, said that the company has been ramping up its production since April.
While the capacity utilisation in April was 50 percent, that improved to up to 70 percent in May. From July, Narendran added, the company plans to achieve full capacity utilisation.
Steelmaking was listed as one of the essential services by the Government.
The top executive added that demand has been better from the rural markets, and from construction industry. Auto sector continues to drag.