Companies

Tata Steel eyes new businesses to tackle future challenges

Suresh P Iyengar / Thomas K Thomas Mumbai | Updated on September 26, 2019 Published on September 26, 2019

T V Narendran, Managing Director, Tata Steel

Targets 30 per cent revenue from non-core businesses in five years.

From setting up scrapyards to steel recycling plants to developing new materials such as graphene, Tata Steel is looking to seed new businesses in a bid to limit the impact of uncertain steel pricing on its revenues.

TV Narendran, Managing Director, Tata Steel, told BusinessLine that 30 per cent of the company’s revenues would come from non-core businesses in five years. Currently, it gets about 10 per cent of its revenue from these initiatives.

“We are planting the seeds of the future. One seed is the service and solution, the other is our new materials business, where we are working with graphene,” said Narendran.

Read also: Tata Steel Q1 profit plunges 64 per cent on lower realisation, higher costs

Under the service and solution business, Tata Steel is selling finished steel products directly to the end consumer. The company is already offering several products, including doors, windows, modular housing, and furniture. “The retail business is living up to its expectations. Currently, we are selling 8,000 steel doors a month, and we would like to sell 30,000 doors. The journey has taken us slightly longer than we thought simply because it is a very customer-centric business and the supply chain was not stable. Now when the supply chain is stable, orders need to be chased. There is a huge potential in this business. It is now worth a few hundred crores, and it will grow rapidly,” he said.

On graphene products

In the new materials business, Tata Steel is working with graphene. With the increasing threat from alternative products, the company is focussing on developing advanced material to protect its margin and bottom line.

Its Graphene Development Centre has recently produced corrosion-resistant graphene paint and supplied graphene powder to renowned tyre companies.

It has also demonstrated the potential of graphene inks, which are used in the printing of train tickets, plane boarding passes, and RFID (radio-frequency identification) tags. Like other conductive inks, graphene ink can be used to create printed materials that conduct heat and electricity.

Narendran said that the company is working with Indian Railways to coat coaches with graphene from the inside. The company is also working on various other applications for graphene with a target to generate 10 per cent of overall revenues from new materials, he said.

The company is also getting into the steel recycling business in a big way. “We are setting up our next centre, which will come up next year, near Delhi. We are also setting up scrapyards in all regions,” said Narendran.

This comes even as the government has come out with a draft steel scrap policy, which is aimed at curtailing import dependency and making India self-sufficient by producing high-quality ferrous scrap.

Narendran said that though this business may not add to the topline as much as the other new businesses, it is also aimed at reducing the carbon footprint and ensuring sustainable production of steel. “We are doing a lot on using technology in different areas. For example, we are looking at how can we use the poor quality raw material to make good quality steel,” he said.

e-Commerce

The online business is turning out to be another game-changer for Tata Steel. In 2018, the company had launched an online portal, Aashiyana, to sell construction material such as Tata Tiscon rebars.

 

Published on September 26, 2019
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