Tata Steel beats auto sector blues with higher sales in branded products

Tata Steel has overcome the slowdown in automotive sector by registering higher sales in segments like industrial projects and branded products.

During April-September of FY20, Tata Steel's sales volumes in industrial products and projects moved up by eight per cent year-on-year (y-o-y). Sales growth in branded products and retail were even higher at 10 per cent y-o-y.

The company's crude steel production in the period under review was up 13 per cent y-o-y with deliveries rising six per cent to 8.1 million tonnes (mt).

"Despite the slowdown, deliveries in branded products and retail segment and industrial products and projects segment were largely maintained. Lower volumes to automotive segment were compensated by higher exports," Tata Steel said in an investor presentation.

Tata Steel could achieve higher sales in branded products segment by enhancing presence in focused micro segments and also through channel augmentation. 'Aashiyana', the company's first ever multi brand portal for individual home builders with six Tata Steel brands on board generated Rs 100 crore revenue in April-September of FY20, compared with Rs 100 crore logged during the entire FY19. The company is on course for Rs 250 crore revenue from 'Aashiyana' by the end of FY20.

In the LPG segment, the steel manufacturer improved its performance quarter-on-quarter. From 53 per cent in Q1, Tata Steel's market share in this segment moved up to 64 per cent at the end of Q2 in this fiscal.

In the downstream segment, wires division clocked five per cent year-on-year growth whereas tubes division recoded nine per cent growth y-o-y during April-September.

Tata Steel admitted in the presentation that realisations were down with lower sponge and long steel prices and further impacted by adverse products mix amid sluggish automotive sector. But the company succeeded in ramping up market share in all segments including the besieged automotive sector despite fragile demand.

Going ahead, the steel maker is focusing on widening customer base within automotive segment and diversifying to non-auto segments like agriculture, railways and lifting & excavation.