A majority of the steel companies in the world, which recorded huge losses in the first quarter, were likely to face a similar situation in the next two quarters due to the unprecedented global meltdown, Tata Steel managing director B. Muthuraman said today.
"Only a year ago, we were all talking of a robust economy and growth but the scenario looked different within a year's time", Muthuraman said while unfurling the National Tricolour here on the occasion of the 63rd Independence Day.
The economic recession, he said, had resulted in a lack of liquidity in market, leading to lack of consumer credit and working capital world over, he said.
The meltdown had a serious impact in all sectors of industries, including the steel sector. There was a sharp drop in the demand for steel and sharper drop in its prices, the Tata Steel MD said.
However, India alongwith China were fortunate that the impact of the prevailing recession was not much compared to other parts of the world, Muthuraman said.
The global meltdown witnessed since October 2008 had not been witnessed since the Great Recession of 1930, he said. Inspite of a sharp drop in demand and prices of steel, India and China have shown positive growth in its demand, Muthuraman said.
While the demand in steel witnessed 50 per cent slump, Japan and Korea registered 20 per cent drop even as the prices of steel was halved compared to last year all over the globe.
Muthuraman predicted that the steel sector was likely to witness an overall drop of 20 per cent in demand in the year 2009.
As the private steel major has its operation not only in India but Europe and South East Asia, he said the company has initiated efforts to face the challenges of the meltdown strongly and become one of the best company in the world.
Appreciating the spirit of its employees to weed out the challenges, Muthuraman stressed the need for cost control and said the company was restructuring its operation in Europe.
Later, talking to newsmen, Muthuraman admitted that the prevailing drought-like situation could affect the economic growth of the country but appreciated the measures initiated by the Union government to tackle the situation.
