Tata Steel Targets Rs 11,500 Crore Cost Reductions Globally by FY2026
| 2025-05-18
Tata Steel plans global cost savings of Rs 11,500 crore as it transitions operations in India and Europe, focusing on efficiency improvements and green steel initiatives.
Tata Steel aims to cut Rs 11,500 crore in costs globally by FY2026, focusing on efficiency, fixed cost reduction, and green steel transition in Europe.
Tata Steel plans global cost savings of Rs 11,500 crore as it transitions operations in India and Europe, focusing on efficiency improvements and green steel initiatives.
Tata Steel, one of the world's largest steel producers, has announced plans to cut operational costs by Rs 11,500 crore (approximately USD 1.3 billion) across its global operations by the end of the 2026 financial year. The initiative focuses on reducing controllable costs and improving efficiency amid expansion in India and significant restructuring in the United Kingdom and the Netherlands.
The announcement was made by Tata Steel’s Executive Director and Chief Financial Officer Koushik Chatterjee during a recent call with analysts. He outlined the company's cost transformation roadmap, which includes measures already implemented in the current financial year and new targets for the next 12 to 18 months.
Structural Cost Reductions in Progress
In the financial year 2024–25, Tata Steel achieved structural cost reductions totalling Rs 6,600 crore by focusing on fixed costs, manufacturing efficiencies, optimised procurement, and streamlined raw material usage, including more efficient coal blending.
Looking ahead, the company plans to implement further cost-saving measures worth Rs 11,500 crore globally. "Our focus continues to be on controllable factors," said Chatterjee. "We are targeting further cost takeouts across geographies by improving efficiencies."
India Operations Focused on Productivity
In India, Tata Steel intends to deliver Rs 4,000 crore in savings by enhancing key performance indicators (KPIs), increasing employee productivity, and optimising the supply chain. The strategy also includes investing in capital projects with short payback periods and reducing conversion costs by Rs 1,000 to Rs 1,200 per tonne.
The company is also expanding capacity at its Kalinganagar plant to 8 million tonnes per annum (MTPA), a move aimed at boosting domestic production capabilities.
Green Transition in the UK
Tata Steel is undergoing a major transition at its UK operations, particularly at the Port Talbot facility in South Wales, which is the country’s largest steelworks. The company plans to move away from traditional blast furnace methods towards lower-emission electric arc furnace (EAF) technology that uses scrap metal.
The UK government has committed £500 million in financial support for this transition. According to Chatterjee, planning permissions are in place, technology providers have been selected, and design work is nearly complete. Site activities are expected to begin shortly, with £35 million already spent on the project during the 2025 financial year.
Tata Steel has already reduced its fixed costs in the UK from £995 million in FY2024 to £762 million in FY2025 and aims to bring this down further to £540 million in the coming year. The company has also announced job cuts as part of the restructuring.
Transformation Programme in the Netherlands
In the Netherlands, Tata Steel operates a steel plant in IJmuiden, which produced approximately 6.75 MTPA of liquid steel in FY2025. The facility is undergoing a comprehensive transformation to increase production efficiency, reduce fixed costs, and optimise its product mix.
The company aims to save £500 million in the Netherlands through improvements in repair and maintenance processes, productivity gains, and other operational efficiencies. Discussions are underway with Dutch trade unions and the government to support the transformation, particularly its decarbonisation components.
Chatterjee confirmed that the Dutch government has completed pre-notification procedures with the European Commission, a step required for potential funding approvals. The government has also briefed parliament about ongoing discussions with Tata Steel and the Commission.
Capital Investment and Financial Position
For FY2026, Tata Steel has allocated Rs 15,000 crore for capital expenditure across India, the UK, and the Netherlands. Approximately 80 per cent of this budget will be invested in ongoing projects in India.
The company's net debt stood at Rs 82,579 crore as of March 2025, a reduction of Rs 6,200 crore from September 2024. During the fourth quarter of FY2025, Tata Steel reported a consolidated net profit of Rs 1,200.88 crore—more than double its profit for the same period the previous year. Operating expenses were also reduced from Rs 56,496.88 crore to Rs 54,167.61 crore year-on-year.
Context: Global Steel Industry and Decarbonisation
The global steel industry is under increasing pressure to reduce carbon emissions, as steel production is one of the most energy-intensive and polluting industrial processes. Transitioning to electric arc furnace technology is a significant step toward decarbonisation, as it relies on recycled scrap rather than iron ore and coke.
Tata Steel’s investments in the UK and Netherlands reflect wider industry trends as European governments incentivise cleaner industrial processes to meet climate goals. The company’s strategic cost-cutting and modernisation efforts are aimed at positioning it competitively in this rapidly evolving landscape.
With global operations undergoing structural transformation and increased investments in sustainability, Tata Steel is aiming to balance growth with long-term operational efficiency.
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