Financial Daily from THE HINDU group of publications
Friday, May 03, 2002
Financial Daily from THE HINDU group of publications Friday, May 03, 2002 |
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Corporate
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Outlook Tata Steel's new vision Ambar Singh Roy
JAMSHEDPUR, May 2 TATA Steel has unveiled its Vision 2007 statement, which is aimed at ensuring that the steel major emerges as an EVA (economic value addition)-positive company with a profit before tax of between Rs 800 crore and Rs 1,000 crore within the next three years. The company also hopes to ``seize the opportunities of tomorrow and create a future that will make us an EVA-positive company''. The vision statement has drawn on inputs gathered from employees of the company. Towards this end, Tata Steel is in the process of firming up plans to make a foray into new businesses, which are not highly capital-intensive and where the payback period is relatively shorter, Mr B. Muthuraman, Managing Director of the company, told newspersons during an interface here. Mr Muthuraman said Tata Steel had already initiated discussions with consultants and investment bankers with a view to identifying the new business activity that the company would wish to get into. A firm decision in this regard is to be finalised by the end of the current fiscal. Tata Steel is open to the idea of acquisitions and divestments too. ``We shall look into each of our businesses separately and if we find any of them does not have the potential of turning EVA-positive within the next three years, we shall not shy away from divesting from such ventures'', he said, adding that Tata Steel was not opposed to the idea of managing other steel plants by entering into special arrangements. The company, which employs around 47,000 people, hopes to leverage on the ``power of co-created vision'' and remain EVA-positive on a sustained basis. The challenge now was to convert the vision into a positive action plan. ``Ours is the only steel company in the country to attempt at a sustainable EVA-positive status. This year, we shall be among the only five steel companies in the world to make profits'', Mr Muthuraman said. For purposes of the Vision 2007 statement, EVA has been described as the return on net assets minus weighted average cost of capital multiplied by the invested capital. The statement, which speaks of strategic goals and the strategies that will be adopted to meet the specific goals, focuses on the imperatives of revitalising the company's core business, venturing into new businesses, upholding the spirit and values of Tatas towards nation building, remaining the lowest-cost producer of steel in the world and moving from commodities to brands. According to Mr Muthuraman, leveraging on brands would form part of the core marketing strategy of Tata Steel. Last fiscal, the company sold 2,60,000 tonnes of steel products under the Tata Tiscon and Tata Shakti brands. In the current fiscal, the idea was to sell 5,00,000 tonnes of steel products under these two brands. Tata Steel, which will turn 100-years-old in 2007, would continue to focus on ``profit before tax and not just on turnover'', the Managing Director said, adding that the highest-ever profit before tax achieved by the company was Rs 602.44 crore recorded in 2000-2001.
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