Posted on 21 May 2013
Tata Steel (Thailand) Plc (TSTH), Thailand's largest maker of long steel, is upbeat about bouncing back to profitability in its fiscal 2014 started April 1.
Gupta: Tata will boost production
This confidence stems largely from government pledges to enforce anti-dumping duties on cheap imports as well as higher domestic consumption.
Peeyush Gupta, the president and chief executive, said through fiscal 2013 ended March 31, Tata was singularly focused on turning itself around, and its fiscal fourth quarter showed its first profit before taxes in eight quarters.
For fiscal 2013's fourth quarter, profit before taxes was 62 million baht, reflecting signalling a successful turnaround despite growing pressure from imports and volatile prices, said Mr Gupta.
For the full fiscal year, sales revenue was 25 billion baht, down by 5% largely on the back of a drop in global steel prices and severe pressure on wire rods stemming from large imports of lower-priced Chinese steel.
But in terms of volume, sales rose by 3% to 1.18 million tonnes from fiscal 2012.
The company posted a net loss for the full fiscal year of 4.55 billion baht compared with 1.58 billion for 2102.
Information from the Stock Exchange of Thailand (SET) showed Tata posted consecutive net losses for its last four fiscal years _ 54.4 million baht in 2010, 976 million in 2011, 1.58 billion in 2012 and 4.55 billion in 2013.
Mr Gupta said Tata will boost both its production capacity and sales volume by 10% in the new fiscal year.
Its annual steel production stood at 1.17 million tonnes in fiscal 2013.
"The company expects steel consumption to increase by 5% to 17.4 million tonnes in 2013 from 16.6 million tonnes last year, driven by the government's planned 2-trillion-baht infrastructure investment," said Mr Gupta.
He expects the Commerce Ministry to announce anti-dumping measures on alloy wire rods in June or July.
Tata submitted a request to the government last November asking it to impose temporary safeguards by raising import tariffs by 15.9% on steel wire rods from China.
The company says it is struggling to compete with subsidised imports that are up to 15% cheaper in the local market.
Tata said Chinese firms can sell steel wire at below Thai market prices, as Beijing subsidises the product with an export tax rebate of 9%.
They also declare their steel wire exports to be a compound of boron and chromium, which qualifies them for import duty exemptions.
Imports of steel alloy wire rods from China have been rising significantly from 2011's 443,000 tonnes, reaching 775,000 tonnes last year.
Local consumption of wire rods was estimated at 1.87 million tonnes last year, up from 1.64 million tonnes in 2011.
"Once safeguards are implemented, it will help to offset the losses in the domestic long steel industry," said Mr Gupta.
Shares of TSTH closed yesterday on the SET at one baht, down one satang, in trade worth 19.3 million baht.
