How Tata Steel Overcame Challenges Under Chandrasekharan

Tata Steel more than doubled its Indian capacity through acquisitions and expansion, strengthening cash generation as it pursued a costly restructuring of its European operations.

Tata Steel

Photograph: Kind courtesy Tata Steel

Key Points

Tata Steel has more than doubled Indian capacity since FY2018, making India its primary cash generation engine.
European operations remain challenging, although Tata Steel says it has stemmed losses and begun improving sustainability.
The Port Talbot electric arc furnace is expected to improve the economics of Tata Steel's UK operations.
Kalinganagar's second phase lifted its capacity from 3 mt to 8 mt during FY26, strengthening India's growth engine.
Acquisitions and organic expansion have shifted Tata Steel's business mix towards India and support its 40 mt capacity target.

When N Chandrasekaran became chairman of Tata Sons in 2017, the blueprint for Tata Steel became clear: Double down on India and fix Europe.

A decade on, the India bet has paid off handsomely, with capacity more than doubling through acquisitions and organic expansion.

Europe remains a work-in-progress, but the building blocks for a sustainable business are finally falling into place.

That strategic shift was also underscored by Chandrasekaran at Tata Steel's AGM on July 2.

Responding to a barrage of questions from shareholders about the European operations, the Tata Steel chairman acknowledged that the business had been a challenge for years, but said the group had addressed part of it by significantly expanding its Indian footprint.

Over the past decade, Tata Steel's Indian capacity has more than doubled, making it the group's 'primary cash engine'.

In Europe, the firm has 'stemmed the losses', Chandrasekaran said, but said that there was still work to do.

The picture captures the evolution of Tata Steel under his watch: India has emerged as the engine of growth and cash generation, while Europe is still on a long road to sustainability.

Europe and UK has been a persistent struggle for Tata Steel since its pound 6.2 billion acquisition of Corus in 2007, which brought two major steelmaking sites into the group: Port Talbot in South Wales and IJmuiden in The Netherlands.

While IJmuiden has remained largely self-sustaining, the structurally weaker UK operations have required substantial capital and repeated restructuring.

Losses had prompted then Tata Sons chairman Cyrus Mistry in 2016 to consider an exit from the UK business, either in part or in full, but the plan was put aside later.

Over the past 15 years, UK steelmaking capacity has shrunk from 10 million tonnes to 3.2 mt. A planned shift to low-carbon steelmaking at Port Talbot through an electric arc furnace (EAF), however, is expected to change the economics of the business and put the UK operation on a more sustainable footing.

When construction of the EAF began at Port Talbot in July 2025, an impassioned Chandrasekaran reflected on the site's long and turbulent journey.

'Many naysayers probably thought that this day would not come. And that's why it's important,' he said.

During FY26, Tata Steel commissioned the second phase of its Kalinganagar expansion, taking the site's capacity from 3 mt to 8 mt.

Environmental Scrutiny

In The Netherlands, too, Tata Steel is facing growing environmental scrutiny. Yet as the company grapples with challenges across its overseas operations, India remains firmly on the growth path.

During FY26, Tata Steel commissioned the second phase of its Kalinganagar expansion in Odisha, taking the site's capacity from 3 million tonnes (mt) to 8 mt.

Total India capacity stood at 27.4 mt in FY26, up from 13 mt in FY2018.

Tata Steel also pursued an aggressive acquisition strategy. In 2018, it acquired Bhushan Steel for Rs 35,200 crore under India's insolvency law.

A year later, Tata Sponge Iron, a subsidiary, acquired the steel business of Usha Martin for about Rs 4,500 crore.

In 2022, the acquisition of Neelachal Ispat Nigam Ltd (NINL) -- an asset owned by central and state public sector undertakings -- followed for Rs 12,100 crore.

Together, these investments helped reshape Tata Steel's geographical mix, shifting the centre of gravity towards India from a business once weighted more heavily towards international operations.

They have also expanded the company's options for pursuing its target of reaching 40 mt of capacity.

At the company's last AGM, Chandrasekaran described Tata Steel as being in a 'transformative phase' towards becoming a larger, greener, smarter and more resilient company.

Consumer Push Gathered Pace Under Chandra

Sharleen D'Souza

N Chandrasekaran became chairman of Tata Sons in February 2017, shifting the salt-to-technology conglomerate's focus towards becoming more consumer-centric.

One of the major changes that the Tata group saw was the formation of Tata Consumer Products Ltd (TCPL), which came into being through the merger of Tata Chemicals' consumer products business and Tata Global Beverages.

The formation was announced and initiated in 2019 and completed in 2020.

With TCPL coming into play, Tata brands such as Tata Tea and Tata Salt came under one umbrella, making it a larger consumer platform.

Under the Tata group, other consumer businesses also operate. These businesses include Trent, Titan Company, Voltas, and Infiniti Retail, which owns the Croma electronics chain.

TCPL aggressively expanded its product portfolio through strategic acquisitions. In 2024, the company acquired Capital Foods, bringing popular brands like Ching's Secret (noodles and soups) and Smith & Jones (cooking pastes) under its umbrella.

It also acquired Organic India at the same time. Prior to that, it acquired Soulfull in February 2021.

Arvind Singhal, chairman at The Knowledge Company, said the consumer businesses need better capital allocations.

"Some hard decisions need to be taken to give better returns to shareholders," he added.

Brand expert Alpana Parida said that with TCPL coming into play, the company is now able to capitalise on the growing premiumisation trend.

"Through this move, the Tata group was able to build a house of brands. Prior to this, it only had Tata Tea, Tata Coffee, Tata Sampann, and Tata Salt. All the acquisitions which the company has done over the last few years, have helped it diversify and create a larger portfolio of products," she said.

Tata Group's Digital Foray: A Costly Bet?

Shivani Shinde

N Chandrasekaran's tenure at the helm of the salt-to-software conglomerate, among other things, will also be remembered as a period when the group forayed into diverse segments such as digital commerce and semiconductors.

But questions raised by the board over how long these businesses would remain loss-making have brought some of these bets under scrutiny.

While the group's foray into semiconductors and its decision to set up the country's first fab have been lauded, the entry into and performance of the digital business under Tata Digital have been contentious.

Media reports have suggested that the board was divided over the need for continued funding for these businesses as they continued to report losses.

Tata Digital reported a loss of Rs 4,974 crore in FY26, even as revenue touched Rs 35,990 crore.

The group has invested Rs 26,000 crore in the business, mainly across its platforms BigBasket, 1mg and Tata Cliq.

But with the emergence of quick commerce and the need to compete with rivals, the group will need to continue investing.

Moreover, Tata Digital has been affected by leadership churn. The current chief executive officer, Sajith Sivanandan, is the third so far, and every leadership change has led to an overhaul of senior management.

Under Sivanandan, the company also saw layoffs as he rejigged the firm. Under its semiconductor initiative, Tata Electronics is investing nearly Rs 91,000 crore to set up a fab plant in Gujarat's Dholera and Rs 27,000 crore in an upcoming outsourced semiconductor assembly and test facility.

The projects receive subsidies from the central and state governments. However, both remain at an early stage of development.

Feature Presentation: Aslam Hunani/Rediff