Mr Ratan Tata chairman of TATA Steel said the company needs to take "hard decisions" to restructure its operations. as 2011-12 was a difficult year due to slackening of steel demand globally.
Describing the financial performance of the company in the last quarter as "a matter of concern", he said that TATA Steel has been through the bad times before and it has the fortitude to see itself through.
Mr Tata said that "We have to reduce cost and (be) more cost-efficient. We have to take hard decisions to restructure our operations. I believe there is inherent strength in the company to overcome present challenges.”
Mr Tata further said that the company needs to identify and source raw materials more effectively for European operations, whose performance has been impacted significantly in recent times due to financial crisis in the Euro-zone economies and fall in steel demand.
He added that "(We are) trying to make the European operations as efficient as we can. We are rationalising product mix, opening more markets... We are doing everything we can to go through the crisis," he said, while saying that the situation will remain like this for few more years.
He said that "There is rather grim situation in Europe and UK. Steel demand is low... Pressure is on steel industry and steel mills are being closed due to fall in demand and oversupply. Margins are squeezed for steel industry.”
Stating that the economic crisis in Europe is having an impact on demand of steel and on prices of raw materials, Mr Tata said that "no one could see this when we purchased Corus. I think it will remain like this for few more years."
According to Ratan Tata, impact of the European crisis on TATA Steel can be offset if Indian economy recovers as steel will continue to be primary material for infrastructure building here. He said that "There is a downturn in India but if India itself recovers, the impact (of Europe) will more than offset adding that the steelmaker will be adding 2.9 million tonnes new capacity at Jamshedpur and first phase of the 6 MT plant in Odisha later this year.”
He, however, stressed the need to expedite the expansion process of the company, particularly in India, to have "a bigger pie of the total share" in the steel industry.
Mr Tata also said that the company has recently launched an open offer for TATA Sponge Iron to increase its stake over 50% and make the firm subsidiary of TATA Steel.
Source - Economic Times
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