Why Tata Steel and JSW Steel Experienced Sharp Cash Reserve Declines Between FY22 and FY24

Tata Steel and JSW Steel

The two major steel manufacturing giants in India are grappling with huge financial challenges. Over the past two fiscals, their cash reserves have declined sharply due to increased competition from subsidised Chinese imports and market pressure following the post-pandemic steel price correction.

Tata Steel’s cash reserves declined to ₹8,677.7 crore in FY24, down 45% compared to FY22. The decline is primarily due to China’s post-Covid asset crisis, which led to overcapacity and a surge in steel exports.

Government-subsidised Chinese steel imports touched an eight-year high, drastically reducing profits for domestic manufacturers. Between 2022 and 2024, China’s finished steel exports to India grew 2.4 times and hot-rolled coil (HRC) imports grew 28 times, intensifying price competition in the domestic market.

JSW Steel reported a double-digit profit decline in Q2FY25, while Tata Steel experienced a 13% sequential profit decline despite turning profitable. Analysts remain cautious, citing weak post-festival demand, falling steel prices, limited export opportunities and a lack of stimulus measures from China.

JSW Steel’s reserves also fell 28% to ₹12,348 crore in FY24, with both companies reporting negative free cash flow, a sign of broader financial struggles.

Depleting cash reserves and shrinking profits are hampering steelmakers’ ability to pursue ambitious capital expenditure (capex) plans. Tata Steel is rethinking its capital expenditure strategy amid cheap imports and pricing pressure. Managing Director T.V. Narendran stressed that current EBITDA levels in India do not support large-scale investments.

Despite these challenges, Tata Steel is managing ongoing commitments in India, the UK and the Netherlands, including key projects at Port Talbot and Ijmuiden.

In India, Tata Steel aims to invest ₹10,000 crore annually to achieve a capacity of 40 MTPA, with a focus on expansion in Kalinganagar, Jamshedpur and Ludhiana. Meanwhile, JSW Steel has cut its FY25 capital expenditure target to ₹4,000 crore but plans to invest ₹1 lakh crore to reach a capacity of 50 MTPA by 2030.

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