Tata Group patriarch Ratan Tata has said the next 12-18 months is likely to be "difficult and challenging" for Tata Steel, but has hope that it would come out stronger and more cost-effective.
"The past year and probably the next 12-18 months are likely to be difficult and challenging for Tata Steel," he wrote in a letter dated May 31 to the shareholders in the company's annual report.
Tata said the effects of the global economic downturn seriously impacted the company's global operations in the second half of the last fiscal.
"The demand for steel declined by 26 per cent in the UK and Europe in the third quarter compared to a year earlier, and after a further contraction in the fourth quarter, demand had fallen by 57 per cent in the UK and 44 per cent in Europe compared with a year ago."
Tata Steel acquired Anglo-Dutch steel maker Corus for $12 billion in 2007.
The Indian operations witnessed a decline in demand by 11 per cent in the third quarter, reflecting the reduced activity in infrastructure and commercial vehicles, he said.
Tata Steel, he said, has taken aggressive steps to meet the challenges of these difficult times through major initiatives in cost reduction, process improvement and production rationalisation.