Tata Steel expects revival of demands in Europe

"In Europe, we expect a modest two and a half percent growth against the backdrop of a negative growth this year," Managing Director H.M. Nerurkar told IANS in an interview.

The company also believes that the economic reforms announced by the government would help accelerate GDP growth and give a fillip to the demand for steel in the country.

"In fiscal 2012-13, growth in domestic steel demand is expected to be around five and a half percent. Total demand is expected to be around 75 million tonnes, up from 71 million tonnes in 2011-12. In 2013-14, demand is expected to be higher at around seven percent," Nerurkar said.

Tata Steel, which is a part of the $100 billion Tata Group, posted a Rs.363.93 crore loss in the second quarter of the current financial year as against a profit of Rs.212.43 crore in the corresponding quarter of the previous year.

Lower demand, in both India and the European markets, and the high cost of raw materials have affected the company's profitability in recent quarters. The demand for steel is depressed in Europe because of a severe economic slowdown and austerity measures by most of the countries in the region.

Tata Steel's European unit, formerly called Corus, is the largest in Europe. The Tata Group, led by the then chairman Ratan Tata, had acquired the Anglo-Dutch Corus in 2007 for $12 billion. The company is now called Tata Steel Europe.

Tata Steel's India business is also affected by weak demands as the country's economic growth slumped to a decade low. The Indian economy expanded by a sluggish 5.4 percent in the first half of the current financial year after growing by 6.5 percent in 2011-12.

"Formation of the cabinet committee on infrastructure for single window clearance for mega projects will generate activity in the power and roadways sectors, among others. The expected lowering of interest rates by RBI in January will provide impetus to the manufacturing and consumer durables sectors, among others. The full impact of all these will be felt in 2013-14," Nerurkar said.

He said India was expected to emerge as the second largest producer of crude steel in the next two years.

"With the ongoing greenfield and brownfield expansions India is expected to become the world's second largest producer of crude steel in the next two years," he said.

Jamshedpur (Jharkhand)-headquartered Tata Steel can produce over 30 million tonnes of crude steel every year. It operates in more than 20 countries and has a commercial presence in over 50.

(Gyanendra Kumar Keshri can be contacted at gyanendra.k@ians.in)