Restructuring and improving cost competitiveness in Tata Steel is an ongoing process and is not restricted to Europe or business that is suffering, said Koushik Chatterjee, Group Executive Director (Finance and Corporate), Tata Steel.
From mid-90s, Tata Steel Indian operations have gone through massive restructuring which is not visible at this point of time.
There was a time when Tata Steel used to have 80,000 people for a three-million-tonne steel production capacity but today it employs 25,000-20,000 people for 13 million tonne production capacity, he said.
Tata Steel’s cost competitiveness in converting raw material to finished product will be the lowest and Ebitda margins would be the best in the industry, he added. Even today after being among the most profitable company in steel sector globally, the restructuring continues.
This year, the company has taken out 2,000 people by way of separation in India and investments in technology and digital space continues.
“Our efforts will continue to make the company leaner and profitable. We could not emulate the success in the UK due to market conditions,” he said. Each market has different trajectory.
The per capita steel consumption in the matured UK market will not grow at 1.3 times of GDP.
Thirty years from today, India may become a matured market and will not grow at today’s rate but from today it will grow at a faster rate than the world average, he said.
It is also important to ensure that factors for production, including cost of labour, energy and taxes, are more competitive than the peer countries.
The whole of Europe has developed country cost structure which includes climate change cost and high taxes.
In fact, manufacturing competitiveness moves a bit depending on the fundamental factors, said Chatterjee.
Asked whether the company regrets about investment in Europe, he said way back in 2006, when Tata Steel made the investment in Europe the robustness of demand in developed markets were much more stable than emerging markets like India.
This apart, the challenges in putting up new capacity in India were significant and it still continues.
Tata Steel has taken almost 10 years to put up a steel plant (in Kalinganagar) for want of approvals and facilitations.
“The delay was not because we did not have capital.
“Just like us many companies were looking at logical de-risking by spreading across geographies.
“No company across sectors would have predicted the financial crisis,” he said.