Tata, Essar Steel Taking Measures to Improve Forecasts

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Although JSW Steel reported historically high production numbers, they’re not without their troubles, while Tata Steel reported a huge profit decrease recently. So what exactly are the drivers for Indian steelmakers’ current woes?

Tata Steel Chief Financial Officer Koushik Chatterjee told reporters that the high raw material cost and volume impact had negatively impacted domestic operations.

Steel demand in emerging markets had increased, but on the other hand, it had dropped in Europe towards the end of the quarter on the back of the Eurozone crisis. The company remained hopeful, though, that global steel demand would improve in the current fiscal year with stabilizing raw material prices.

On the flip side, Tata Steel announced at the same media briefing that it was hopeful of completing the first phase of its greenfield project at Kalinganagar in Odisha by the early part of the next fiscal year, adding to existing capacity.

The 6-million-metric-ton project is to be completed in three phases. The second phase is expected to come online by FY 2015. Already, by the company’s own admission, it has invested millions in the new plant.

A third player, Essar Hypermart (which is the retail initiative of Essar Steel, a fully integrated flat carbon steel manufacturer – from iron ore to ready-to-market products), painted a slightly happier steel market forecast. Essar Hypermart plans to sell one million metric tons of steel in the current financial year under its expansion plans.

The company is exploring the northern and central India markets for its expansion. It already has a strong presence in the west and the south of the country.

Essar opened up a new retail outlet in Ghaziabad in Uttar Pradesh, the largest Indian state, recently. Its CEO, Ashok Bajpai, delved into his company’s expansion plans at the inauguration.

He told journalists that Essar Hypermart would target Tier II and Tier III Indian cities for growth. These are cities with lesser populations than the metro cities like Mumbai and New Delhi. The aim is to make steel available closer to the end-user point and caters mainly to customers in small and medium (SME) segments.

The company aims to create a stock point every 200 kilometers (125 miles) across India though Bajpai did not give a definite time line.

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