With fears of the situation in Europe negatively impacting its European operations, Tata Steel is increasingly looking at Asia, Africa and Latin America where the real growth will most likely be, according to Chairman Ratan Tata. In his statement in the company’s latest annual report, the Chairman said that while Tata Steel’s operations in India were expected to remain strong, its operations in Europe would continue to be under “enormous stress for the next year or two until the Western European economy recovers”. For Tata Steel, sales volume in Europe remained flat through the year at around 3.5 million tonnes per quarter. For Tata Steel, while India contributes 27 per cent of the revenue, U.K. accounts for 26 per cent and the European Union (excluding U.K.) 29 per cent.
Restructuring and capacity rationalising initiatives were under way to reduce costs and under utilisation, Mr Tata said, while noting that unprecedented increase in prices of iron ore and coking coal, coupled with an acute decline in demand would continue to impact European operations.
“Steel plants are being closed or moth-balled to conserve costs and to control over-supply,” he said referring to the significant decline in steel consumption in the West due to the prolonged downturn in the developed world particularly the European Union.
“By contrast, the demand for steel is still buoyant in Asia and Africa where growth rates and investment levels are higher than the West and where new sources of iron ore and coking coal are being developed”, he said.
Greenfield projects
Mr. Tata said that by 2014, Tata Steel would have a global capacity of 33.5 million tonnes adding another three million tonnes on full implementation of the Odisha project. The 2.9 million tonne expansion project in Jamshedpur is likely to go on stream within this fiscal taking Jamshedpur’s capacity to 9.7 million tonnes. Tata Steel’s new 6 million tonne per annum plant in Odisha is under construction.
