We must get to competitive levels of productivity and capability: Karl-Ulrich Kohler

Interview with MD & CEO, Tata Steel Europe

Steel demand in Europe continues to be a concern because of the euro zone crisis. It, and operational difficulties, caused a downturn in performance of Tata Steel Europe (TSE). Earnings were Rs 1,777 crore in 2011-12, against Rs 4,691 crore in 2010-11, and production was 14.3 million tonnes, less by half a million tonnes than in FY11. Shubhashish spoke to : Karl-Ulrich Köhler, managing director and chief executive officer of TSE, on 2012-13. Edited excerpts:

Will we see higher steel production from TSE this year?
Our plan this year is to at least keep the levels of last year. We might even see a slight increase as a result of the ongoing improvements/ measures. When the blast furnace comes on stream around November, we should see certainly a better capability to perform.

There is uncertainty regarding shutting of businesses and job losses. Have they subsided or is there a chance of pruning other than the ones already announced?
We have communicated with our people extremely openly and at an early stage. We have taken full responsibilities and we have had an open and fair discussion with the unions and avoided hardships. So, we are trying to play this element very responsibly. But, there is no way to avoid getting ourselves to competitive levels of productivity and capability. For that, we need to invest and also to streamline our organisation.

Is there a chance of more businesses of TSE being shut?
We are, in our daily and month-to-month management, following a plan where we are scrutinising ineffective and inefficient installations, small installations mainly or permanent loss-makers, make the necessary decisions and sort it out. On the big sites, like Ijmuiden (Holland), the programmes are known and established. In Scunthorpe (England), it’s already done (blast furnace has been idled). In Port Talbot (Wales), the main problem is the equipment; that’s why we are investing to fix it, otherwise we can’t get to any decent productivity.

You said production will be similar to last year. How do we see profits improving this year?
Last year, we established management improvement tasks as a system. We captured management gains to the tune of £200 million and this year, these gains will increase massively. I hope the market is not eating it away, so that it becomes invisible like it happened this year.

The Benga project (in Mozambique) is expected to give 0.8 million tonnes of coal to TSE and it will come at market rates. How is this of more advantage to the company than getting coal from any other source?
The coal comes at a market rate to use, so it doesn’t make any impact on the bottom line of the company in that regard. For me, it is good quality coal, secured by offtake agreement and, therefore, we can optimise production plans accordingly and improve our processes to make coke.