A majority of the steel companies in the world, which recorded huge losses in the first quarter, were likely to face a similar situation in the next two quarters due to the unprecedented global meltdown, Tata Steel Managing Director B. Muthuraman said here on Saturday.
“Only a year ago, we were all talking of a robust economy and growth but the scenario looked different within a year’s time,” Mr. Muthuraman said while unfurling the National Tricolour here on the occasion of the 63rd Independence Day.
The economic recession, he said, had resulted in a lack of liquidity in the market, leading to lack of consumer credit and working capital world over, he said.
The meltdown had a serious impact in all sectors of industries, including the steel sector. There was a sharp drop in the demand for steel and sharper drop in its prices, the Tata Steel MD said.
However, India along with China were fortunate that the impact of the prevailing recession was not much compared to other parts of the world, he said. The global meltdown witnessed since October 2008 had not been witnessed since the Great Depression of 1930, he said.
In spite of a sharp drop in demand and prices of steel, India and China have shown positive growth in demand, Mr. Muthuraman said.
While the demand in steel witnessed a 50 per cent slump, Japan and Korea registered 20 per cent drop even as the prices of steel were halved compared to last year all over the globe. Mr. Muthuraman predicted that the steel sector was likely to witness an overall drop of 20 per cent in demand in the year 2009. As the private steel major has its operations not only in India but also in Europe and Southeast Asia, he said the company had initiated efforts to face the challenges of the meltdown strongly and become one of the best companies in the world.
Appreciating the spirit of its employees to weed out the challenges, he stressed the need for cost control and said the company was restructuring its operations in Europe.
Later, talking to newsmen, he admitted that the prevailing drought-like situation could hit the economic growth of the country but appreciated the measures initiated by the Centre to tackle the situation.
