Tata Steel has overcome the slump in automobile sector by achieving higher sales in other emerging segments like branded products and retail, industrial products and projects, and downstream.
The meltdown in automotive sector rubbed on Tata Steel with sales in this segment dipping 11.47 per cent year-on-year (YoY) in the April-June quarter of this financial year. Automotive sector is one of the key components driving Tata Steel’s sales. The steel company is the market leader in auto grade steel sales, with a share exceeding 45 per cent. Tata Steel is one of the key suppliers of high-tensile and auto galvanised products and also, the steel firm is the largest supplier of skin panels.
In the April-June quarter, Tata Steel countered the sagging sales in automobile sector by logging higher volumes in other segments- branded products and retail, industrial products and projects, and downstream. Firm sales growth in these alternative segments helped Tata Steel to achieve 16 per cent overall spike in sales to 3.66 million tonnes (mt), outpacing the industry average of 7 per cent.
Branded products and retail registered 20 per cent increase in sales while industrial products and projects surged 23 per cent YoY in the June quarter, data from the company’s results presentation said. Tata Steel’s sales in the downstream segment also strengthened by 11.1 per cent.
Currently, branded products and retail contribute 44 per cent to Tata Steel’s overall sales while enriched or value-added products account for 68 per cent of the total deliveries. In order to widen its product portfolio, Tata Steel has continued its unwavering focus on research and innovation.
In the downstream segment, Tata Steel recorded the best ever retail sales of branded products — Tata Structura and Tata Pipes, growing 18 per cent YoY in the June quarter. Stepping up downstream sales is part of Tata Steel’s deft strategy to counter the vagaries of a cyclical steel business.
Tata Steel aims to expand downstream products capacity, targeting 30 per cent volume sales from this segment by 2025. The company's ‘services & solutions’ initiative is viewed as a value multiplier and is anticipated to generate 20 per cent of revenue by the same period. Tata Steel is also looking beyond steel to power its revenue. This vertical is tipped to contribute 10 per cent to the company’s revenues by 2025.