Financial Risk

Inflation concerns have been mounting particularly in the US and Europe. As the Company is on a
growth path, the cost of financing may be adversely affected by the rising rate environment. The
Company is also exposed to currency volatility given the import requirements, foreign currency debt
and offshore operations.

Tata Steel has been generating strong cash flows on the back of strong operating performance and
focused working capital management. It has been aggressively deleveraging over the last few years
which has improved its credit metrics. In October 2021, S&P upgraded Tata Steel to investment
grade level ‘BBB-‘. The steel sector is subject to an extensive, complex and evolving regulatory
framework that may have material impact on operations. Any deviation in compliance and
adherence has the potential to not only impact the Company’s operation performance but also
impact its reputation adversely. The aim is to protect and enable business to generate value.

Regulatory Risks.

The steel sector is subject to an extensive, complex and. complex regulatory framework that may
have material impact on its operations. Any deviation in compliance and adherence has the
potential.to not only impact the Company's operating performance but. Impact its reputation
adversely. Global disruptions, emerging trade patterns and evolving. Environmental & sustainability
policies, etc. could influence business decisions and footprint.

They are committed to complying with existing laws and regulations, promoting environmental
stewardship and have a policy of zero tolerance to non-compliance. The Company has a robust
compliance management system to ensure awareness and compliance. Technology is being utilized
to track compliance, timelines with appropriate escalations, action plans and reviews.

Macroeconomic and Market risks.

Steel demand is affected by high inflation, especially for energy and commodities, trade barriers and
protectionist policies.

Tata Steel has invested in building a strong marketing\refranchise with well-regarded brands and a
large network of distributors and dealers across the country. The Company has forayed into ready-
to-use steel for construction industry and introduced products such as steel doors and windows.

Operational Risks.

Tata Steel's operations and customer service levels could be affected by events outside its control,
such as natural disasters, epidemics or pandemics, the company has said.

The Company is focused on adopting advanced maintenance practices to improve plant availability
and reliability. The Maintenance Technology Roadmap is welling progress for transitioning to
Predictive Maintenance based practices. Digital initiatives have been undertaken to optimize
inventory and improve process efficiencies to achieve benchmark availability at optimal cost.

Safety Risks.

Inconsistent adherence to process & workforce safety laws and regulations may have an adverse
impact on business continuity and operation. The Company's operations at multiple locations subject
the Company to various stringent safety\laws and regulations. Contagion poses risk to workforce
health and safety and could lead to business disruptions.
Tata Steel has continuously fortified the Safety\management and built a safety-focused culture
across business operations. The workforce has been moralized into 5,000 PODs and inter-POD
movement is restricted to prevent contamination. Digital platforms have been continuously
enhanced to address and mitigate key concerns.

Community Risks.

An erosion of trust with communities will slow down the impact of our work and lead to the loss of
reputation or business continuity for us. This is fostered through continuous dialogue, recognition of
aspirations and an appreciation of cultural nuances leading to a relationship based on trust.

Tata Steel's key impact programmers are aligned to the Sustainable Development Goals 2030
agenda. These have yielded significant long-term results including more than 2,400 habitations being
declared child labor free zones. Tata Steel Thailand is one of the first 30companies that joined
UNICEF in Child Friendly Business.

Commodity Risks.

Volatility in raw material prices (mainly coal and iron ore) impacts the input costs in steelmaking.
China's continued ban on Australian coal, Indonesia's ban on coal exports in January 2022 and
ongoing Russia-Ukraine conflict have already resulted in a shift in global metallurgical coal trade
flows.

Steel companies are taking several steps to manage the price volatility of raw materials such as coal
and iron ore. We use predictive analytics tool to have advance information on price direction and
optimize the timing of our spot buys through auctions. Captive/domestic raw materials provide
another avenue to guard against volatility as they have relatively stable cost/price.

Supply Chain Risks.

Tata Steel has one of the most complex value-chains extending from mining to customers. 40% of
the steel capacity is concentrated in Eastern India, whereas the consumption points are largely in
North, South and Western part of India. The statutory norms are getting more stringent and there is
emerging need to address Environmental and Social Governance issues.

Tata Steel's supply chain is complex but provides opportunities for value maximization through
global optima. In order to keep up with the production growth, Tata Steel is developing its own port-
Subarnarekha Port Private Limited. Digitalization and Optimization are the key levers being used to
enhance visualization and bring about integration.

Information Security Risks.

The Company's focus on digital transformation has increased vulnerability to cyber-attacks and non-
compliance with IT legislation and regulations may lead to business disruption and penalties.
Transition to remote working models and accelerated adoption of digital technologies has made the
Company more vulnerable to such attacks.

SAP and other corporate systems which were On-Premise have been migrated to Cloud. The
Company is evaluating SDWAN (Software\redefined Wide Area Network) to build capacity and
resilience in its network.