Tata Steel could be in for challenging times in India. The company is ramping up production from 8 million tonnes (mt) to 10 mt at its Jamshedpur plant, despite the slowing demand in its two key sectors — automobile and infrastructure.
So far, the company has done well to push the excess production in the market by realigning its marketing strategy. Despite the slowdown, the launch of new car models has helped the company sell its enhanced production. In infrastructure, the company markets re-bar like an FMCG player; Tata Tiscon is sold through over 3,500 dealers.
“We have put up a new segment for small and medium enterprises. This has helped us, apart from the increased share of auto customers,” Managing Director T.V. Narendran said after the September quarter results.
It is no wonder that Tata Group Chairman Cyrus Mistry chose Narendran, with a rich marketing background, to replace H.M. Nerurkar, who retired in October.
So far, steelmakers have managed to raise prices to maintain margins amid rising input costs, especially coking coal. Rupee depreciation, which made imported steel expensive, has provided the ammunition to mark up prices.
The ensuing general election and the uncertainty on the lending rate scenario will keep the infrastructure sector on tenterhooks and Tata Steel on its toes to increase its market share.