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Next 12-18 months difficult for Tata Steel

Tata says the effects of the economic downturn seriously impacted the company`s global operations.

Updated: Aug 10, 2009, 22:00 PM IST

Mumbai: Tata Group patriarch Ratan Tata
has said the next 12-18 months would likely be "difficult and
challenging" for Tata Steel, but hopes that it would come out
stronger from the difficult period to become a more cost-
effective manufacturer of the alloy.

"The past year and probably the next 12-18 months are
likely to be difficult and challenging for Tata Steel," he
wrote in a letter dated May 31 to the shareholders in the
company`s annual report.

Tata said the effects of the global economic downturn
seriously impacted the company`s global operations in the
second half of the last fiscal.

"The demand for steel declined by 26 percent in UK
and Europe in the third quarter compared to a year earlier,
and after a further contraction in the fourth quarter, demand
had fallen by 57 percent in UK and 44 percent in Europe
compared with a year ago."

Indian operations witnessed a less pronounced drop in
demand of 11 percent in the third quarter, reflecting the
reduced activity in infrastructure and commercial vehicles,
he said.

Tata Steel, he said, has taken aggressive steps to
meet the challenges of these difficult times through major
initiatives in cost reduction, process improvement and
production rationalisation.

Tata Steel would need to make substantial investment in
a phased manner to secure raw material from its overseas
mines, it said, adding that the company was also evaluating
several other mineral projects in Brazil and Australia.

Tata Steel India is self-sufficient in iron ore and
with regard to coking coal, the company is self-sufficient to
the extent of 52 percent.

Bureau Report