Tisco Mulls Diversification Into Mining, Power
Tata steel major, Tisco is aiming at a diversification into areas like mining and power to provide a buffer against the volatility of the steel business.
Top Tata group sources said with steel being a cyclical industry, the company's bottomline is likely to suffer during periods of downturn. Diversification into relatively steady areas like mining and power will help the company to absorb some of the cyclical jolts.
Tisco sources when contacted refused to specify the areas of its planned diversification. They, however, said that "Tisco will continue to look for areas of diversification, not just to settle its bottomline, but also as have an alternative resource ".
The sources, however, said the company had no plans to merge some of Tisco's numerous subsidiaries with the parent. They also denied they were looking for a possible buyer for their special steels division which has an important niche role to play in the wires business.
However, the Tata Strategic Management Group (TSMG) has recommended that Tisco should consider engineering as its future growth area and restructure the associated companies.
Accordingly, it was suggested that Tata Technodyne Ltd. (TTL) be made the holding company for all Tisco's engineering companies. TTL, a wholly-owned subsidiary of Tisco, was promoted in June 1996 to undertake turnkey projects in the core sector.
TTL was to bid for projects, considering the strengths of all the companies under its fold, which was to include Tata Korf Engineering Services, Stewarts and others. TTL was to develop its own expertise in project/construction management and bring in the state-of-the-art project and construction management to India.
Tisco is also looking at increasing its share of value added products. It wants to phase out the production of intermediate steel products and increase production of finished steel to 3.2 million tonnes. A foray into electric grade steel is also on the anvil.
It recently decided to shift its proposed cold rolling mill project from Gopalpur in Orissa to Jamshedhpur due to lack of infrastructural facilities The earlier plan of an integrated steel plant at Gopalpur will now be taken up after the year 2,000.