Tata Steel expects 20% jump in sales this fiscal

The domestic steel market is likely to grow 4-5%, but Tata Steel expects to increase its sales by almost 20% this year due to the premium on its products and the quality of its service.

It is also launching a host of initiatives at Corus to take its savings at the subsidiary to £1 billion by the end of financial year 2009-10. B Muthuraman, managing director, Tata Steel, said on Friday, “Our sales are expected to be 6.4 million tonnes in the current year and many of our units can produce beyond a capacity of 100%.”

The company had launched a drive to reduce working capital in the last quarter of fiscal 2008-09. In flat products, it reduced inventory by 54% in the period while in long products, the average inventory level was 21 days. It also worked to increase sales to government and government-funded projects. 

Hot metal, crude steel and saleable steel increased year-on-year by 23%, 18% and 26%, respectively, in the fourth quarter. “Given the fall in costs of coking coal and iron ore, the cost reduction for an integrated steel plant is likely to be $200 a tonne. The second half of 2008-09 was difficult but we managed to improve our market share in long and flat products. This year, Tata Steel can sell much more than the market,” Muthuraman said.

The company is investing Rs 15,000 crore in its Indian operations. While its Jamshedpur project is on track, the Orissa plant at Kalinganagar is yet to kick off. “The project has been delayed by two years. We are still waiting for iron ore allocation from the Orissa government. In Jharkhand, we are beginning to procure land and have applied for iron ore,” Muthuraman said.

In Corus, the company has started a drive to cut costs and production parameters. Till March 2009, the company had saved £638 million, which it hopes to take to a total of £1 billion by the end of this fiscal.