There are two sides to Tata Steel, a struggling European operation at the centre of attention since the $12-billion acquisition in 2007 and a consistently profitable Indian business that has managed to outperform not only its other half by far but also peers in the domestic market.
In terms of profits, Tata Steel India has always been ahead of JSW Steel and Steel Authority of India Ltd (SAIL). The contrast got starker in financial year 2016, when the steel major recorded a net profit of Rs 4,901 crore as against a standalone loss of Rs 3,498 crore by JSW Steel and Rs 4,137 crore by SAIL.
“Tata Seel India is one of the low-cost producers in the world. We have been for a while and will continue to be,” said
T V Narendran, managing director, Tata Steel India and South East Asia. Along with SAIL, the company has an edge over competitors by virtue of raw material linkages.
Tata Steel’s coal security comes from west Bokaro division and the Jharia coalfields with estimated reserves of 287 million tonnes (mt). About 65 per cent of coal requirements are, however, met through imports; iron ore needs are met by the Noamundi, Joda, Khondbond and Katamati mines. According to Narendran, raw material linkages help but the advantage is limited, given the raw material prices are low and the taxes on captive raw materials in India are high. “What drives our competitiveness is our relentless pursuit of cost efficiencies across the value chain. Today, only a few other steel companies who have a fully integrated value chain and operate in countries like Russia and Brazil and have benefitted from a weak currency over the last year or so, have a better cost position than us,” he added.
Source: Business Standerd