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Tata Steel expects its cost cutting measures and new product launches lined up for this fiscal to see it through the tough times ahead.
Speaking at a shareholders meeting on Wednesday, Tata Steel Chairman Cyrus Mistry said it was a challenging year for the steel industry, hit hard by the global economic crisis and overcapacity.
Euro zone steel demand contracted 9.3 per cent last year and total steel production was almost 30 per cent lower than the pre-2008 financial crisis level, said Mistry in his first address to the company’s shareholders.
Tata Steel had a significant market in this region, he added. In the face of volatile raw material prices and demand weakness in key markets, the next 18-24 months would still be challenging for Tata Steel.
Over-capacity in China and a demand shortfall in Europe were also key concerns, he added. Tata Steel has implemented a 3 million tonne per annum expansion plan at its existing Jamshedpur facility. This increased the capacity to 9.7 million tonnes, he said.
The facility is ramping up and an incremental 1 million tonne of steel was produced during the year, taking total production to 7.94 million tonnes.
The Kar Vijay Har Shikhar programme to spot improvement opportunity across the value chain had resulted in a cost saving of Rs 1,100 crore last year, said Mistry.
The project was expected to strengthen the product profile of the company, he added.
In Europe, Tata Steel launched 17 new high value products, with another 30 new products planned for this year.
The restructuring initiatives taken by the management in Europe resulted in savings of over £200 million.
“However, we have a long way to go with a number of initiatives under implementation to align the company’s strategy to be competitive and flexible in the future,” said Mistry.
Natsteel, a subsidiary of Tata Steel, is growing its product line in the reinforcement solutions business in Singapore. Natsteel has also started operations in China and Malaysia.
> suresh.iyengar@thehindu.co.in
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