Mining is one of the growth areas for Tata Steel: CFO Koushik Chatterjee

The company has chalked out a master blueprint for growth in India over the next decade, Tata Steel CFO tells Ishani Ayan Dutt

The steel industry’s profitability in 2019-20 has been impacted compared to the previous year. Koushik Chatterjee, executive director (ED) and chief financial officer (CFO) of Tata Steel tells Ishita Ayan Dutt that the prospects for 2020-21 are better. Also, the company has chalked out a master blueprint for growth in India over the next decade. Edited excerpts:

How will Brexit impact Tata Steel Europe?

We have been constantly assessing the situation over the last couple of years. We do have contingency plans in place, including supply chain and customer servicing requirements to handle the transition. Beyond the transition issues, we would watch out for specific trade agreements that will be negotiated and put in place between the UK and EU.

Will asset sale, idling of capacity and job cuts help Tata Steel Europe turn around?

That’s not how we would like to approach the issue. We have an objective to make the business cash flow positive and sustainable across cycles. To achieve the above in a time-bound manner, the Transformation Programme has been developed with multiple workstreams and several bottoms up ideas generated. These include areas like customer centricity, procurement and operational excellence, working capital management, productivity, organisational efficiency and recalibration of capital expenditure, among others. 
 

In a geography like Europe, cost take out programmes are critical and continuous to ensure that the business remains competitive.  So, none of the actions planned are adhoc but thought through on merit.

What are the capacity expansion plans in the domestic market after Kalinganagar Phase 2?

We have a master blueprint for growth in India over the next decade covering all our major sites, including Jamshedpur, Kalinganagar and Angul. Our assessment also covers the broader product mix and technology choices. So, we are well prepared for growth but would calibrate growth and execute the same taking into account the market conditions and with financial prudence. 

Is there a plan to merge Tinplate, Tata Steel Distribution and Tata Steel Long Products?

Tata Steel Long Products is our long products cluster created as part of the simplification and consolidation initiative. This is almost done and we need to realign a few of the adjacent businesses. So, this will be the vehicle of our future long products growth and there is no plan to merge the long products business at this point of time. Tinplate is a 100-year-old packaging business and is an important part of the flat products portfolio and so is Tata Steel Distribution. Both these businesses are part of the downstream portfolio of Tata Steel.

What is the demand outlook in Q4 and FY21 for the domestic market?

I think, the next six months would be strong and has historically been so as the January-June period is the best period for the industry, globally. The good thing is that industry’s stocks are low across the value chain. So, there will be a period of restocking which has already started and we see firming up of demand and prices across most geographies.

What are the plans for merchant mining?

For a company which has been in mining for more than a century, it is a natural strategic progression. We are strategically focused on developing our mining portfolio in select and focused minerals. As India opens up the mining sector, we will also grow the portfolio over time. We now have an identified company that will be dedicated to commercial mining and build portfolio and capabilities.

Any slowdown solution for the finance minister?

This time around, India has not been able to de-couple itself from the global slowdown. This is largely due to multiple internal factors. Hence, there will be a slow recovery and needs a multi-lever approach. Fundamentally, the government has to focus on demand side triggers, revive credit flow to medium and small scale sectors and bring back business confidence to restart the investment cycle. Given the underlying economic conditions, it would be necessary to take immediate steps to revive growth as a priority. An aggressive and structured disinvestment process of the PSUs would be an important lever to fund the fiscal slippage in the coming year.