Tata Steel has had an extremely good 2003, a year in which it surpassed records for the April-to-September period after garnering a turnover of Rs 5,262 crore, up 26 per cent over the same block last year. The company become EVA positive by Rs 295 crore, up a whopping 699 per cent over the corresponding period in 2002, while its earnings per share improved by 153 per cent.

Tata Steel’s production in the first half of the financial year increased by over 10 per cent. This happened while the company was reducing its consumption of raw materials and energy and the refractory consumption per tonne of saleable steel. Meanwhile, the productivity of Tata Steel’s workforce has recorded an improvement of almost 50 per cent.

The company’s enhanced focus on branding enabled it to boost the sale of its branded flat products to 21 per cent of total flat-product sales, and long products to 30 per cent of total long-product sales. Tata Steel improved its product mix in 2003 as it increasingly started supplying high-quality steel to automobile companies, white-goods manufacturers and other demanding customers.

Tata Steel gained market share in hot-rolled products (for the automobile segment), galvanised cold-rolled (CR) products (for construction appliances and automobile companies), CR products (for original equipment manufacturers in the appliances and automobile segments), and high-carbon wire rods. By enhancing its product and market mix Tata Steel has propelled itself away from the cyclical nature of commodity prices towards a stable and higher realisation regime.

On the exports front, Tata Steel raised its revenue by 27 per cent, from Rs 552 crore to Rs 699 crore. This has resulted in the company winning accolades such as the ‘Outstanding Export Performance Award’ and the ‘Engineering Export Promotion Council National Award’.

Tata Steel’s performance in 2003 was commended by rating agency Crisil, which upgraded its credit rating from AA+ (high safety) to AAA (highest safety). Among the other honours bestowed on the company were the ‘Prime Minister’s Trophy for the Best Integrated Steel Plant’, the ‘Nasscom-Economic Times Best IT User in Manufacturing Award’, ‘Asia’s Most Admired Knowledge Enterprise (MAKE) 2003’, and CII’s ‘Best Establishment Award in the Eastern Region’.

On the restructuring front, keeping international best practices in mind, Tata Steel has decided to float a fully owned subsidiary called Jamshedpur Utility and Services Company Limited (JUSCO), which will in a phased manner take over activities that are not core to the company’s business. It is expected that JUSCO will be able to offer its services more economically and deliver better quality.

As an initiative in non-steel areas, Tata Steel entered South Africa, which accounts for 50 per cent of the world’s ferrochrome production. The company’s proposed ferrochrome plant in Richard’s Bay will enjoy the benefits of power at low cost and proximity to the market. In another non-steel initiative, the Titania project in Tamil Nadu is well under way following the grant of three prospecting licences covering 80 sq km. The project involves mining ilmenite and other minerals before upgrading them into synthetic rutile or titanium dioxide slag.

Higher volumes, a superior product mix and improved process have translated into better margins for Tata Steel, and its new initiatives in cost control, operational efficiency and customer relationships are expected to lead to significant future gains.

Tata Steel’s advantages are many and it is undertaking several growth- and efficiency-oriented projects to seize the opportunities of tomorrow. The company is poised to enter the iron-ore business, with plans to utilise existing leases to expand volumes and serve markets in India, China, South Korea and Japan. Production is expected to reach 5 million tonnes per annum in the initial phase of this project.

Over the next few years Tata Steel expects to grow stronger still as an industrial enterprise, with a dominant share in several domestic steel-consuming segments, a growing presence in key international markets, and a strong position in related mineral and steel-downstream industries.

Uploaded on January 5, 2004