Despite a significant fall in India operations' EBITDA, T V Narendran, Managing Director, Tata Steel-India and South East Asia, remains hopeful that the company will sell whatever it produces. In an interview with Aditi Divekar, he talks about comfort from not having to buy iron ore from outside and his wait for Kalinganagar unit to get operational.
Tata Steel India has witnessed significant fall in EBITDA due to weak steel prices and demand. Now with an additional cost head of District Mineral Fund (DMF), where do you see the EBITDA?
Certainly, 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 5 million tonne 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 cost. About domestic steel demand, it is okay, Tata steel always sells whatever it produces, so I am not concerned about the volumes.
Tata Steel may not be 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 industry, one needs to look at the longterm perspective and not just on quarter-on-quarter basis. So given that, 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 entire three-million tonnes from this plant? Does the mid-2015 deadline for this project stand pushed back?
See the plant is almost ready but is waiting for some environment clearances. We have sought the consent-to-operate (CTO) but the government has asked some clarficiations 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 Thailand deliveries have been under pressure. How do you see the deliveries scenario going ahead, given that even Thailand steel industry is hurt due to increased imports?
Last month, after a long time we crossed 100,000 tonne sales in Thailand, and so its good. If you see the Thai economy, its the slowest growing economy 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.
Source: Business Standard