Tata Steel seeks to raise Millennium, NatSteel profits
The Financial Express — June 20, 2006

Tata Steel is weighing various options before it to boost the profitability of Singapore-based NatSteel Asia and Thailand-based Millennium Steel (MS), the two companies it acquired during the last two years. "We are finding the synergies. We are finding many opportunities among ourselves," T Mukherjee, Tata Steel deputy managing director (steel), said while speaking to FE recently. India's biggest private sector steel company wants both the entities to restrict themselves to buying only local scrap and produce as much steel as possible from it, and stop importing scrap.

"We want that both NatSteel and Millennium Steel should not import scrap," observed Mr Mukherjee. The steel major wants them to meet the rest of their needs by way of importing billets from either Tata Steel or from any other Indian source. Thailand attracts zero duty on import of billets, whereas rebars attract 5% duty. "So it is better to import billets there (Thailand) than rebars." Tata Steel could also help the two entities in procuring any surplus "pooled hot metal" available with it "at a negotiated price".

(Pooled hot metal is unutilised hot metal from blast furnaces which is poured in an open pit to cool down and later crushed to size by a 'balling' process, for future use anywhere.) The steel major generates a lot of scrap each year, which too could be utilised by both the two South-East Asian companies by "matching the price" with other bidders. Again, as two of the three Millennium Steel (MS) plants in Thailand are port-based.

"We are also thinking of putting up a mini blast furnace at one of the plants in order to enhance steel production," he said, adding Tata Steel had a vast knowledge resource pool and would put them to use judiciously. Asked what sort of margin improvement could be expected by adopting the steps, Dr Mukherjee, without quantifying, said, "it would go to improve substantially".