BackMore asset right-sizing likely for Tata Steel Europe
Adverse currency movement and Chinese imports may force the company to undertake further asset right-sizing, says Cyrus Mistry
Premium
Mumbai: Tata Steel Europe is likely to continue with the restructuring of its UK operations. Adverse currency movement and Chinese imports may force the company to undertake further asset right-sizing, Cyrus Mistry, chairman, Tata Steel Ltd said in the company’s annual report.
Tata Steel expects steel margins to remain under pressure in Europe in 2015. “The UK business of Tata Steel Europe is the most impacted by the surge of Chinese imports as its domestic demand continues to be weak," Mistry said in the annual report for 2014-15.
Mistry added that the global economy continues to be fragile and uncertain especially with regard to the impact of the Chinese slowdown and the Eurozone crisis.
On 17 July, Tata Steel announced 720 job cuts at its Rotherham facility as part of its business restructuring strategy. In its annual report, the company also said that it will go on with its strategy to monetize non-core assets.
In India, the steel maker expects demand to improve on the back of government spending and infrastructure projects.
“The steady decline in stalled projects coupled with hike in import duty in both flat and long products should stimulate steel demand. Recent weakness in Indian rupee has also helped competitiveness of domestic steel players," the company said. However, the company expects margins to remain under pressure due to high imports from China.
According to data available with the joint plant committee under the steel ministry, total finished steel imports by India rose 53.1% in the April-June 2015 period on a year-on-year basis.
Tata Steel also looks to start commercial operations at its ambitious ₹ 25,000 crore Kalinganagar integrated steel project in Orissa in the second half of the current financial year.
In 2014-15, the company spent ₹ 13,492 crore as capital expenditure, a large part of which was towards the 3 million tonnes Kalinganagar project.
Tata Steel Ltd gained 0.28% to ₹ 285.10 per share on Monday on the BSE, at 2.08pm, while the benchmark index Sensex lost 0.39% to touch 28,352.92 points.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
