A standalone loss of over Rs 4,500 crore in the fourth quarter and a 60% drop in consolidated profit haven't held back Tata Steel.
B Muthuraman, the outgoing managing director of the company, said demand for steel in India and China is up by 2-4% even as the rest of the world is reeling under production cuts. "Volumes in India are up and we will achieve sales volumes of 20-25% in the current year because of the increased capacity at Jamshedpur," he added.
Finished steel production at Tata Steel for 2008-09 stood at 5.37 million tonnes, 11% higher than the previous year. In financial year 2008-09 steel deliveries, at 5.23 million tonnes, were 9% higher than in the previous year.
Meanwhile, Tata Steel is likely to raise its stake in Canadian mining company New Millennium Capital Corp (NML) to 80% from 19.9% at present.
NML will provide iron ore for the Tata Steel UK. "Tata Steel will increase its stake to 80% in the JV," a company official told DNA Money.
After completion of a feasibility study (expected by the third quarter of 2009) of NML's direct shipping ore (DSO), Tata Steel has the option to raise stake in the company to 80% within 180 days. It will also have a 100% offtake right on the DSO production.
"The DSO properties have estimated reserves of around 100 million tonne of historical resources," the company official said.
Subject to completion of a positive feasibility study, regulatory approvals and project financing, NML is expected to produce 4 mtpa of iron ore products from 2010.
Tata Steel UK has been forced to go in for a 47% cut in production as there is not enough demand in Europe. Kirby Adams, CEO, Tata Steel UK, said, "The production cut at Tata Steel UK is what it was in January-February. However, we are restarting the sixth blast furnace at our steel-making facility in Netherlands in July."
Tata Steel has also acquired Ryerson Holding (India) Pte Ltd's entire 50% stake in the Tata Ryerson joint venture. Koushik Chatterjee, chief financial officer, Tata Steel, said, "We haven't made any payment as of now and have signed a share purchase agreement today itself. We will pay $49 million for the remaining stake."
The JV company was formed in 1997. Muthuraman said, "Back then, India did not have high quality processing steel for automobile and the white-good sectors. This company catered to those markets and had a turnover of Rs 1,300 crore last year."
Source: DNA India