Bouncing Back

After a difficult FY24, some companies got it right the following year. What worked for them?

- BY KRISHNA GOPALAN

BUSINESSES ARE OFTEN pushed to the limit. The ability to rebound is what sets them apart. In that sense, financial year 2023-24 (FY24) was marked by multiple challenges. What set the year apart was the beginning of the current geopolitical turbulence, which, by the looks of it, could be prolonged.

Understandably, many firms slipped into the red. But the sturdy ones got their act together and bounced back in FY25, as reflected in the BT500 India's Most Profitable Companies list. Of course, that is not to suggest that the current fiscal year or the immediate future will be any less difficult.

COPING AND CHARGE

The nature of the challenge varied depending on the industry. In steel, for instance, FY24 was marked by an uneven global macroeconomic landscape. T.V. Narendran, Chief Executive Officer and Managing Director of Tata Steel, which saw the biggest turnaround (see table), says China's transition from investment to consumption-led growth contributed to reduced demand, exacerbated by a sluggish real estate sector. "Overcapacity in China and higher exports pressured global steel prices, while capacity in regional markets intensified competition." On top of that, there was geopolitical tension, which disrupted supply chains.

By contrast, FY25 began with optimism. India's steel sector saw higher output and consumption. "In FY25, Tata Steel achieved its highest crude steel production ever at 21.7 million tonnes (MT) and deliveries of 20.9 MT, driven by near full capacity utilisation across sites. Plus, we successfully commissioned India's largest blast furnace unit (5 MT) at Kalinganagar," says Narendran, adding that Neelachal Ispat Nigam, a recent acquisition, delivered a strong performance-1,000 crore Ebitda (earnings before interest, taxes, depreciation and amortisation) and positive free cash flows.