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Mistry looks at a Larger Play in Europe

Mistry looks at a Larger Play in Europe

Cyrus Mistry, chairman, Tata group on Friday said that Tata Steel UK is in discussion with strategic players in the steel industry for potential joint venture.

Photo: Reuters Photo: Reuters

Cyrus Mistry, chairman, Tata group on Friday said that Tata Steel UK is in discussion with strategic players in the steel industry for potential joint venture. A day before, Germany's Thyssenkrupp AG said it is continuing discussions with Tata Steel for a potential joint venture in Europe. "We are focused on developing a sustainable business in Europe. In this context, we look at a larger strategic play and are in discussions with companies, the government and other stakeholders," said Mistry in response to a shareholder query at the annual general meeting (AGM).  It is potential to improve the performance with new investments in steel making and rolling facilities as well as restructuring in the UK, he added.
 
The growth in Europe is expected remain low in this financial year amidst uncertainties like Brexit referendum, migrant crisis and local geopolitical tensions, he said in his speech. "In the last financial year, the European market faced challenges including significant third party import, especially to the UK, sharp drop in the spread between steel and raw material prices and volatile currency movements. The adverse operating environment in Europe deeply impacted the consolidated financial performance of Tata Steel UK," he explained. The company has focused on higher value products than volume in the UK in the last financial year and it lead to 13 per cent drop in production. "The Netherlands business generated the bulk of the operating earnings in the last financial years for European business… The European business launched 30 new products in the last year," said Mistry.
 
At the Indian business, the steelmaker is undertaking a programme to structurally enhance the business through operational improvement, right sizing of manpower, improvisation of employee productivity and new product development. "In the next couple of years, the new Kalinganagar plant will be the key growth driver for the company. The combination of Jamshedpur and Kalinganagar plants will enable us to enhance the product portfolio and customer footprints," he noted.  
 
Mistry pointed out at the importance of supply side discipline, which is critical for the health of the steel industry. "As the world adjusts to the structurally lower commodity prices, the consolidation of the steel industry would remain a key thing, especially in geographies where demand is unlikely to go up in the near future." He added that Tata Steel's Indian business is the foundation of the whole business. "The Indian business' growth was strong because of automotive and special products sale. The branded products and retail sales contributed to 35 per cent of the sales last year. Tata Tiscon, the largest brand of Tata in India, registed highest sales with 13 per cent growth. Retail customers increased to around 30 lakh households across India," he said.  
 
"We are getting used to an unpredictable and dynamic market environment. The current fiscal will not be any different from the previous year. In India, the economic growth is projected to remain strong as low inflation and government growth stimuli will benefit the overall economic development. The GST bill is an important step towards stable economic environment. Having said that we must not forget the weakness in financial sector as well as global macro economic risks which pose serious threat to the India growth story," he added.  Earlier, Tata steel was looking to sell the bleeding UK assets after the cheap Chinese dumping turned it unviable.

 

Published on: Aug 13, 2016, 11:39 AM IST
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