Tata Steel Outperformed Emerge! Tata Steel India One OF The Low Price Producers

There are two contractual to Tata Steel, a struggling European operation at the centre of attention since the $12- billion redemption in 2007 and a consistently profitable Indian Business that has managed to outperform not only its other half by far but also peers in the small market.

In the terms of profit, Tata Steel India has always been ahead of JSW Steel and Steel Authority of India Ltd (SAIL). The contrast got starker financial year 2016, when the steel major recorded a net profit of Rs 4,901 crore as  against  major recorded a net profit of Rs 4,901 crore against a standalone loss of Rs 3,498 crore by JSW Steel and Rs 4,137 crore by SAIL.

Tata Steel India is one of the low-cost producers in the world. We have been for a whole and will continue to be, said T V Narendran, managing director, Tata Steel India and South East Asia Along with SAIL, the company has an edge over competitors’ by virtue of raw material linkages.

Tata Steel’s coal security comes from west Bokaro sector and the Jharia coalfields with estimated reserves of 287 million tonnes (mt). About 65% of coal requirements are however met through imports: iron ore needs are met by the Noamundi, Joda, Khonndbond and a Katamati mines. According to Narendran, raw material linkages help but the advantage is limited, given the raw material coast are low and the taxes on captive raw materials in India are high. What drives our competitiveness is our relentless pursuit of cost efficiencies across the value chain. Today, only a few other steel companies who have fully mingled value chain and operate in countries like Russia and Brazil and have benefitted from a weak currency over the last year or so, have a better cost position thoseus, he added.

At residence, Tata Steel outperformed peers Tata Steel India’s stellar performance in FY16, comes at a time when competition from Chinese imports is growing at about 200% Sales of 9.54 mt were the best ever for the steel major. Domestic steel prices India declined compared to previous quarter and the impact of the MIP (minimum import price did not reflect in the market coast. There was a strong growth across product market segments Narendran said.

Automotive and special products achieved highest ever sales of 1.43 mt and contributed to 15% of total sales; branded products and retail sales surged to 3.35mt and contributed 35%. Tata Tiscon registered highest ever sales of 2.51 mt in FY16, a growth of 13% while retail customers increased to 3,000,000 residence across India. The company is not reclining on it achievements. It is trying to fortify its leadership place in the domestic automotive segment. The balance and ramp-up process of the three-million-tonne Kalinganagar plant is currently underway. The facility will produce flat steel for high –end applicators, permissive the company to expand its product portfolio in the shipbuilding, defence equipment, energy & power, oil & gas infrastructure and aviation zones.

In the last five years, Tata Steel has invited over Rs 40,000 crore, to increase capacity from 7mt to 13 mt in India. Narendran said simultaneously, the company is also working on building a capacity at its Jameshpur plants.

The company has got environmental clearance to increase hot metal capacity in Jamesdpur to 12.5 mt and steelmaking capacity to 11 mt.

But the Indian operation were never a cause for worry its overseas plans that had not quite gone according to plan. We have had a significant movement in the South East Asian operations due to the various actions taken there to focus on cost efficiencies and market facing initiatives. We have also pruned the portfolio further so that we are more focused on the businesses that have a long-term future. Narendran said Tata Steel has two mt footprints in South East Asia, where steel consumption is growing at 6%.

Bangladesh is another fast growing market that we will try to services out of India, he said.

What about Europe? There are a number of actions underway to optimize our footprint and build long-term competitiveness, is all that Narendran is willing to day at the moment.

Tata Steel has announced rebuilding of its European portfolio in March which included divestment of Tata Steel UK, in whole or in parts, after struggling to make it work for nine years. In the last five years, it had suffered assets wreckage of two billion pounds.