Posted on 21 Apr 2015
Despite a significant fall in Indian operations’ Ebitda (earnings before interest, taxes, depreciation, and
amortisation), T V Narendran, managing director, India and
South East Asia, Tata Steel, remains hopeful. He tells Aditi Divekar
about gaining comfort from not having to buy iron ore. He also speaks of his
wait for the Kalinganagar unit (Odisha) to get operational. Excerpts:
Tata Steel India has witnessed a significant fall in its Ebitda
(operating earnings) due to weak steel prices and demand. Now, with an
additional cost head of the district mineral fund (DMF), where do you see the
Ebitda?
The margins will remain squeezed as steel prices fall and also because of the
DMF contribution, but at least there is comfort that we won’t have to buy iron
ore. We bought almost five million tonnes last year and some of the overhang is
still going on. So, hopefully Tata Steel will have their mines operational,
where we will save on raw material costs. About domestic steel demand, it is
OK. Tata Steel always sells whatever it produces, so I am not concerned about
the volumes.
Maybe Tata Steel is not affected in terms of its volumes, but steel
prices have declined, so realisations will take a hit. How do you plan to
tackle that?
In the steel sector, one needs to look at a long-term perspective and not just on
a quarter-on-quarter basis. We believe in the government's Make-in-India theme
and are hopeful that steel prices will move up once demand goes up, as more
investment comes into the infrastructure segment. We are bullish on the demand
front.
Can you give us an update on your Kalinganagar plant in Odisha? Will
the FY16 production figures include the entire three million tonnes from this
plant. Does the mid-2015 deadline for this project stands pushed back.
The plant is almost ready, but is waiting for some environmental clearances. We
have sought the consent to operate (CTO), but the government has asked for some
clarifications and we have replied. As soon as we get the CTO, about 150 days
from then, the plant will start to run. As far as production contribution from
Kalinganagar goes, I will not comment till I get the CTO. For
Kalinganagar, we are waiting by the day and whether this project stands pushed
back only depends on when we get the CTO.
Tata Steel’s Thai deliveries have been under pressure. How do you see
the deliveries, given even the Thai steel sector is hurt due to increased
imports?
Last month, after a long time, we crossed 100,000-tonne sales in Thailand, and
so it’s good. If you see the Thai economy, it’s the slowest-growing one in
South East Asia, as there was a lot of political instability. But the martial
law has been giving some economic stability, so we hope things will look up in
coming months.
