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Mr B. Muthuraman, MD

Bangalore , Sept. 10

TATA Steel has asked the Government to prevail upon China to lift restrictions on import of steel from India.

The Tata Steel Managing Director, Mr B. Muthuraman, told newspersons on Wednesday that China should itself lift restrictions because India is one of the lowest producers of steel. Currently, the quota for India is 3 per cent of the total steel imported by China.

Mr Muthuraman said steel manufactured in India would continue to be more competitive than those produced in China because China does not have enough iron ore resources to sustain the price advantage.

Mr Muthuraman, however, said that changes in export will not affect the company's bottomline because Tata Steel exports a mere 15 per cent of its total production.

"Our realisation from export is lesser than realisation from domestic sales," he said. Mr Muthuraman said during the first quarter, Tata Steel posted a net profit of Rs 267 crore. "We expect similar results for the rest of the year too," he said.

He said the company turned EVA (economic value added) positive during 2003-04 while posting a net profit of Rs 1,045 crore.

"We want to maintain EVA positive performance in the face of growth," he said.

Mr Muthuraman said Tata Steel has decided to focus on growth for the current decade. He said the company would put up an additional one million tonne plant at Jamshedpur at a cost of Rs 1,700 crore.

The company expects to complete the project by 2005.

Tata Steel is also putting up a ferrochrome plant in South Africa with Industrial Development Corporation of South Africa at a cost of Rs 250 crore.

Tata Steel will hold 74 per cent of the equity while the rest will be with the South African partner. Another titanium project in Tamil Nadu was undergoing a techno-feasibility study, he said.

Mr Muthuraman said during 2002-03, Tata Steel produced 2.7 lakh tonnes of more steel compared with the previous year. For 2003-04, an additional three-lakh tonnes will be produced. Mr Muthuraman said steel companies are measured on cost, volumes, product mix and price parameters and Tata Steel was comfortable on all the four parameters.

`Global steel prices will stabilise soon'

MR Muthuraman said that global steel prices would stabilise soon as capacities were being reduced and trade practices were becoming more transparent.

Mr Muthuraman said the current steel prices should go down further. He said the prices could stabilise soon because of reduced capacities and consolidation taking place in the industry. Tata Steel would not be affected by price fluctuations because the company enters into long-term contracts with customers for most of the steel it produces. Hence, any price fluctuation that happens involves the spot market in which Tata Steel has very little exposure, he added.

Mr Muthuraman said the flat product prices would stabilise soon. He said prices in this segment are cyclical in nature but they concern prices in the spot market. "But for long-term contracts, price fluctuations don't matter," he said.

"We are entering an era of price stability," Mr Muthuraman said. He said this was mainly because of various reasons. One of the reasons for the price stability is because trade practices are transparent than they were earlier. It was also because capacities in European and the US plants are being brought down. "There is a genuine capacity cut taking place," Mr Muthuraman said.

He said globally there was an increasing focus on consolidation, which was healthy for the industry. There was also no rush for putting up more steel plants.

"Because of these reasons, price will be more stable soon," Mr Muthuraman said.

In the case of long products, which are used for construction, there has been a sudden surge in demand for such a variety of steel. This was largely because of boom in the construction industry, he said.

"There has been an increase of 50 per cent in consumption of long products during the last four months of this current fiscal," Mr Muthuraman said.

He said currently capacities do not match the demand for long steel and hence quite a few steel manufacturers are adding more capacities and this could lead to a dip in prices, Mr Muthuraman said.

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