We have had an outstanding year and have surpassed many previous production and sale records. All our divisions have done exceedingly well, and the company was EVA positive in FY03. Crude steel production crossed the four million tonnes target, producing a record 4.1 million tonnes against a previous best of 3.75 million tonnes. Overall, the company's sales stood at 3.793 million tonnes as against 3.605 million tonnes last year.

In particular, kudos go to the company's Ferro Alloys and Minerals Division: Sukhinda and Bamnipal Chrome Mines recorded the highest ever chrome ore and ferro chrome production, while FAP Joda recorded the highest ever ferro manganese production. The production and sales figures are more or less on target, and the company should be able to meet its profit target for the first quarter of this financial year.

How has Tata Steel's export performance been in relative terms with your industry peers in other Asian countries? Most steel producers in Asian countries (except China) export a bulk of their output. In comparison, exports form a small but consistent portion of our geographical sales mix.

Sales in the international markets constitute about 15 per cent of our overall turnover, on an average. In FY03, this was about 13 per cent. Much of this is in the higher end value-added segments, and is distributed across several geographic regions. We expect to continue to export around 15 per cent in FY04.

Are global steel prices expected to stabilise at the current levels? Can steel makers in India plan capacity expansions, especially down stream capacity amongst secondary steel producers, based on the current price realisations?

We anticipate the steel market to be comparatively stable this year. Market prices constantly adjust to the demand and supply balance, and these prices are generally quoted for the most widely traded products, like the commercial grade of HR and CR coils. The demand for steel is "derived", and is largely dependent on the economic growth of a country. Infrastructure development and industrial growth drive steel demand. The Indian economy has shown resilience and is amongst the stronger economies in the world. The GDP growth rate has been 4.8 per cent to 7.8 per cent over the last 10 years, and we could witness an increasing rate of GDP growth over the coming years. This should result in an ability to increase capital formation, leading to increased demand for steel. Combined with a growing global demand for steel, we can expect a good environment for the domestic steel market. Steel demand in India is expected to grow with development in steel-consuming industries. Capacity addition is one route to meet this, and will depend on the ability to garner required resources.

After exiting from non-core businesses and reducing production costs to global levels, what will be Tata Steel's new and future focus?

As articulated in the Vision 2007 statement, we are focussed on being an EVA positive enterprise. Our plans are in this direction. We are going in for an expansion of one million tonnes of brownfield capacity at Jamshedpur. We are exploring growth through acquisitions too. In our pursuit of growth opportunities, we are looking at options in non-steel areas, like minerals and initiatives in this direction, include the ferro chrome project in South Africa and the titania project in Tamil Nadu.

What are the company's plans for improving its brands' appeal and acceptability? While revenues from last year's sale of branded products has increased significantly, the increase in volumes have not been that significant. What is the projected contribution from branded steel during the current fiscal?

A higher proportion of high value products, as a result of the effective product-mix strategy followed, as well as an increased sale of branded products, resulted in a higher than proportional increase in sales value compared to volume. The need to reduce the adverse impact of the cyclical nature of the steel industry led us to evaluate several options. A well-formulated and effectively executed branding strategy is one of the options. Brands can shape consumer preferences, and, thus, create stability and consistency in consumer behaviour, thus reducing the predominant influence of prices in purchasing decisions. Our experience of branding steel and selling branded products has so far been positive, and going forward, we expect to build on this. Our revenue from branded products has been continuously increasing, and the sale of branded products in FY03 was about Rs 1,286 crore (about 14 per cent of sales), and we expect to increase this to over Rs 2,300 crore (about 28 per cent of sales) in FY04. Increased sales of branded products form a part of the strategy to reduce the influence of the commodity nature of the steel industry.

Are automobile manufacturers more willing to buy Tata Steel's cold rolled steel for use in passenger cars? Is quality still an issue here?

Most automotive manufacturers in India and some abroad are buying Tata Steel CR for their products. The order from the Malaysian car manufacturer Proton is a milestone for the company. Caterpillar, the earthmoving equipment company has awarded us certified supplier status. Hyundai Motor India, Chennai, has conferred Tata Steel its Best localisation award, while Ford India, Chennai, has made Tata Steel its 100 per cent internal component supplier. Tata Steel has recently signed an agreement with Arcelor for the production of "Extra Gal", special quality galvanised steel for automobiles. They have given us the licence to produce and market this product in India and some selected countries abroad in certain volumes. Arcelor will assist Tata Steel in production and marketing, including educating the Indian customer on the benefits and usage of this new material

What is the outlook for the industry in the next two years? Are global steel prices expected to head back down starting later this year from their current highs?

Global steel prices are a derived figure, which really depend on the state of demand and supply, as stated earlier, the increase in infrastructure spend by the government will keep demand buoyant. The steel prices are expected to be comparatively stable in FY04.

After the wave of consolidation amongst steel companies in Europe and Asia, American steel makers such as Bethlehem Steel are considering, and mooting, a consolidation among smaller steel companies for better economies and to handle cheaper imports. Are such M&A activity likely or even possible in India?

The steel industries in Western Europe and the US are faced with mature markets. In contrast, for their counterparts in much of Asia, and particularly in India, the markets are in an early stage of development. In this context, the merger and acquisition activity is expectedly going to be driven by different strategic forces. In addition, the financial institutions and policies in these regions are quite different in the nature of influence they have on M&A activity. In this scenario, M&A activity in India could progress at a different pace. However, the increasing speed of integration in the world steel and financial markets will change this scenario, and accelerate M&A activity in the steel industry in India too.

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