Our Strategy Risk Management

Tata Steel’s Enterprise Risk Management framework

identifies, assesses, monitors, and mitigates risks, Safety risk Supply chain risk » Implemented a data governance
framework to ensure that data is
Integrated steel plants have hazardous As Tata Steel expands in India and
ensuring business resilience and proactive risk operations, adversely impacting the health
and safety of the workforce, which in turn
transitions to green steelmaking in the UK
and the Netherlands, it faces infrastructural
well-protected and retained as per
regulations

management across the Company.

» Configuration and consumption of
may negatively affect business operations stress, geopolitical tensions, and stringent
Gen AI tech in a secure private
and the Company's reputation across ESG norms impacting supply chain
environment to prevent risk
geographies. reliability and costs. Government policies
emanating from AI adoption
also pose risks to the supply chain.
Financial risk Macroeconomic Mitigation Mitigation » Continuous technology refresh to
and market risks » A policy of zero tolerance for » Tata Steel is committed to zero harm. Mitigation eliminate the risk of technology
Tata Steel aims to double its capacity
non-compliance » Adopted various automation and » Tata Steel works to debottleneck obsolescence
sustainably in India. With a net debt of The economic slowdown in China » Constant monitoring of the regulatory technical solutions to eliminate man- India’s port infrastructure through » Replacement of end-of-life systems
I77,550 crore as of March 31, 2024, it has disrupted global steel trade volumes landscape machine interface tie-ups and investment in new
seeks to deleverage and fund the growth impacting adversely global and Indian
through internal accruals and raising
» Robust compliance management systems » Runs focused campaigns on various infrastructure Commodity risk
steel prices, affecting the Company’s to ensure awareness and compliance themes to drive safety culture » Invested in private freight train
external capital from banks and capital business in India, the UK, and the Various geopolitical events, weather
» Policy advocacy to promote best schemes in India: GPWIS (General
markets. The transition to sustainable Netherlands. disruptions and mining issues may lead
steelmaking in the Netherlands and the UK
practices, ensure a level playing field Community risk Purpose Wagon Investment Scheme)
Fast-paced technological changes through safeguard measures, and and SFTO (Special Freight Train to high price volatility and supply chain
also requires significant capital investment. and shifting customer preferences may The communities proximate to Tata disruptions, reducing reliability and
improve the ease and cost of doing Operator)
However, global financial necessitate the adoption of newer grades Steel’s operating locations, particularly in impacting inventory.
business across geographies » Long-term contracts and hedging
interconnectivity, heightened climate of steel and advanced materials. Europe, have growing expectations. An Tata Steel’s operations in the UK
» Focusing on technology and R&D as a strategies for shipping and bunkers
action and sustainability expectations, inability to address expectations may lead and the Netherlands are significantly
Mitigation proactive approach towards evolving are in place
and stringent ESG standards may impact to reputation loss, fines imposition, and dependent on raw material imports and,
» Increasing sales of value-added regulatory requirements » The Company implemented and
borrowing costs. jeopardise licence to operate and business hence, exposed to volatility in raw material
and branded products for sales mix enforced the Responsible Supply Chain
Geopolitical tensions and the continuity. prices and availability. All these may lead
financialisation of commodities might also enrichment Operations risk Policy Framework
» The Company strengthened the to higher costs and cash outflows.
increase raw material costs and financial » Driving improvement projects to Mitigation
External factors such as extreme tracking and measurement
market volatility, impacting the cost of support additional value » Sustained and effective dialogue Mitigation
weather conditions and natural disasters mechanisms for its Scope 3 emissions
capital and exacerbating the impact of INR » Development of a market plan for new with communities through formal » Group-wide smart hedging using
and internal factors such as equipment
depreciation against the USD. facilities platforms, hyper-local community financial instruments
failures, maintenance delays, process
» Creating a diversified portfolio of
safety-related incidents, and ageing assets
engagement, CSR teams and field Information » Price forecasting tools to understand
Mitigation product offerings beyond steel engagement price movements and reverse auctions
» Balance between growth and can potentially disrupt operations, safety, technology risk
» Focusing on building strong customer » The Company designs and for efficient price discovery
deleveraging with a focus on and customer service levels.
relations across geographies implements social impact The Company’s operations significantly » Indigenisation and localisation to
shareholder returns » Focusing on green steel offerings, Mitigation programmes that address core, rely on IT and digital infrastructure, which de-risk the supply chain for both direct
» Diversification of capital sources, particularly in the Netherlands and the » The i-MEC in Jamshedpur enables real- localised development challenges makes it vulnerable to cyber-attacks, data and indirect commodities
including government grants, to UK time asset monitoring and diagnostics, while being regional and national risks and technology obsolescence. » Group-wide diversification of coal
transition to greener operations » Tata Steel, in the Netherlands and the shifting from preventive maintenance change models Non-compliance to stringent IT sourcing to mitigate the risk of
» Prioritise projects with higher value UK, is already focusing on less import- to maintenance prevention » In the UK, the Company is working legislations and regulations may lead to geographical concentration
accretion (ROIC:15%) and short sensitive sectors and markets » Robust disaster management plans closely with the Transition Board the imposition of penalties and an adverse » Deployment of sustainable
payback periods and standard operating processes are and national stakeholders to ensure impact on the Company’s reputation. procurement policy with key vendors.
» Reducing working capital through
Regulatory risk in place the economic regeneration of
Mitigation
» Additionally, the Tata Steel Group
operational excellence and continuous » The UK operations plan to transition South Wales continues to target measures to
improvement programmes » Group-wide adoption of strong IT
The global metals and mining to EAF-based methods » In the Netherlands, Tata Steel is reduce its energy requirements, e.g.
» Sustainable cash flow generation security policies and procedures
industry faces stringent regulations due » In the Netherlands, the Company actively pursuing measures through by increasing the self-generation
» Enhance ESG disclosures and adherence ensure the integrity of cyber security
to geopolitical conditions, trade patterns, adopted the Corporate Asset the ‘Roadmap Plus’ investment of electricity and efficiency
to evolving standards interventions
tariffs, protectionist policies and increased Management Framework (CAMF) for programme to improve the local improvements
» Implementation of 'One Treasury' for » Zero Trust architecture for validation
focus on ESG disclosures. Non-adherence improved insights on the operational environmental performance around
managing cashflows, currencies and at every stage of digital interaction
may impact business operations assets related to reliability, failure, risk dust, noise and odour
commodity hedging across TSG and reputation. and prioritisation of resources

117th Year Integrated Report & Annual Accounts 2023-24 54 55 117th Year Integrated Report & Annual Accounts 2023-24