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Tata Steel
We hosted the management of Tata Steel at our DB Access India conference. We highlight
the key points from our meeting with the management:
Volume growth in India and margin expansion in Tata Steel Europe remain key focus
areas
Tata Steel’s strategy continues to revolve around its objective of improving cash flows by
expanding steelmaking capacities at its high margin Indian operations and enhancing margins
at its European operations through various cost saving initiatives and better streamlining of
operations.
Capacity expansions in India on track
The management was quite confident of completing the undergoing brownfield capacity
expansion at Jamshedpur by 3Q’FY12. Further, the work on the Greenfield Orissa project is
also progressing quite well with the company having taken possession of sufficient land to
execute phase-I of the expansion project.
Improvement in European margins to be driven by cost efficiencies, improved raw
material integration and supply chain improvement
Tata Steel continues on its path to improve the sustainable EBITDA/tonne in the European
operations to US$85-100 levels over the next 3 years. The investment in new capital projects
(especially at the high cost Port Talbot plant) realignment of marketing, sales and distribution
teams and capturing market share in potential high growth areas are likely to be prime drivers
of targeted margin expansion. The recently completed sale of the TCP operations is a step
towards streamlining of Tata Steel’s European operations, and the proceeds are likely to be
used to part finance the increase in working capital requirements at Corus
Improvement of raw material integration – a key strategic objective
Tata Steel has followed a policy of early stage investments in order to enhance its raw
material integration and the management is keenly focused on the timely commissioning and
ramp up at these locations. For the Mozambique coking coal project, the management
maintains that the construction of stage I is on track to be completed by 2H’CY11 and it will
gradually ramp up to 5.3mn tonnes at full capacity with Tata Steel having 40% off take rights.
The New Millennium DSO project has also received environmental approval for phase I and
the construction work is likely to start soon. The management aims to start iron ore
production by 2Q’CY2012.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tata Steel
We hosted the management of Tata Steel at our DB Access India conference. We highlight
the key points from our meeting with the management:
Volume growth in India and margin expansion in Tata Steel Europe remain key focus
areas
Tata Steel’s strategy continues to revolve around its objective of improving cash flows by
expanding steelmaking capacities at its high margin Indian operations and enhancing margins
at its European operations through various cost saving initiatives and better streamlining of
operations.
Capacity expansions in India on track
The management was quite confident of completing the undergoing brownfield capacity
expansion at Jamshedpur by 3Q’FY12. Further, the work on the Greenfield Orissa project is
also progressing quite well with the company having taken possession of sufficient land to
execute phase-I of the expansion project.
Improvement in European margins to be driven by cost efficiencies, improved raw
material integration and supply chain improvement
Tata Steel continues on its path to improve the sustainable EBITDA/tonne in the European
operations to US$85-100 levels over the next 3 years. The investment in new capital projects
(especially at the high cost Port Talbot plant) realignment of marketing, sales and distribution
teams and capturing market share in potential high growth areas are likely to be prime drivers
of targeted margin expansion. The recently completed sale of the TCP operations is a step
towards streamlining of Tata Steel’s European operations, and the proceeds are likely to be
used to part finance the increase in working capital requirements at Corus
Improvement of raw material integration – a key strategic objective
Tata Steel has followed a policy of early stage investments in order to enhance its raw
material integration and the management is keenly focused on the timely commissioning and
ramp up at these locations. For the Mozambique coking coal project, the management
maintains that the construction of stage I is on track to be completed by 2H’CY11 and it will
gradually ramp up to 5.3mn tonnes at full capacity with Tata Steel having 40% off take rights.
The New Millennium DSO project has also received environmental approval for phase I and
the construction work is likely to start soon. The management aims to start iron ore
production by 2Q’CY2012.
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