The year 2016 was among the toughest years for the global steel industry worldwide; India being no exception. The demand for steel as well as prices went down, and there was a sharp increase in imports. To make matters worse, predatory pricing tormented steel producers by affecting their profitability. In such a scenario, Tata Steel addressed the situation with resilience: it ramped up production at its Jamshedpur plant, commissioned the Kalinganagar plant, serviced the requirements of existing customers as well as developed new market segments. These measures helped the company to retain its leadership position in the domestic market, though the after effects of the Corus takeover problems persist even now.
During the year gone by, Tata Steel commenced commercial production at the Kalinganagar Steel Plant. The development further consolidated Tata Steel’s leadership position in existing segments in the domestic market as well as enabled it to address the requirements of high-end grades of flat steel products for use in the automotive, oil & gas, shipbuilding and defence sectors. Besides, the Kalinganagar Steel Plant also commenced exports of Tata Ferroshots. The year also witnessed the setting up of the 55,000-tonne per annum (TPA) ferro chrome plant by Tata Steel at Gopalpur Industrial Park in Ganjam district of Odisha. It is Tata Steel’s first green field ferro chrome plant in India.
“For Tata Steel, the year 2016 would be remembered for the successful commissioning of its Kalinganagar Steel Plant that made record production of 1 million tonnes of hot metal within six months of commissioning. For the first time, Tata Steel India, Jamshedpur and Kalinganagar, clocked 1 million tonnes of monthly sales in September,” says T.V. Narendran, managing director, Tata Steel India & South East Asia.
Narendran reiterates that despite challenging times, the company remains competitive and growth-oriented. Tata Steel is in discussions with foreign companies for investments in heavy industries over the next five years at the special economic zone project at Gopalpur in Odisha. “We have signed a definitive agreement to acquire 100 per cent of the equity in Brahmani River Pellets, which would give a vertical start-up to enabling facilities,” says Narendran.
He says the year 2016 was better than 2015 in terms of trade balance in steel, which was made possible by the central government’s intervention to ensure a level-playing field and firming up of international prices. As we look at the near-term forecast, India would continue to grow in terms of steel demand and consumption. However, the global overcapacity situation, significantly high coking coal prices and infrastructure bottlenecks would keep challenging the domestic steel industry. “India has the potential to become the world’s leading steel producer. We hope the government’s focus on infrastructure will help grow the demand further. We look forward to working closely with the government and contributing positively to the ‘Make in India’ movement,” says Narendran.
However, during the recent disturbance in Tata group, in a letter to shareholders, former board member Nusli Wadia said Tata Steel has already suffered an impairment of Rs 35,000 crore and is likely to face substantial impairment in the future. The capital employed in Tata Steel Europe is about Rs 75,000 crore, with absolutely no returns. Any returns look near impossible, he added. Tata Steel will have to find a way out of the Corus takeover troubles that look like a fiasco in hindsight. Then again, the company has to contend with many ambitious rivals that have big expansion plans in the Indian market.
