A day after *Tata Steel reported its April-June results that beat market estimates, its chairman Cyrus Mistry said that the company is planning to restructure its flagship European operations as well as its European management soon.
“We are looking at various options for our European operations like cost savings, restructuring, and product differentiation,” Mistry said while addressing the shareholders at the company’s annual general meeting.
Tata Steel’s Europe sales declined by 3.8% sequentially during the first quarter of 2013-14 due to lower sales volumes, but its profitability improved.
The company’s marquee acquisition, UK’s Corus Group, which took place in 2007 for £6.2 billion or R27,000 crore, “has in the last five years made a loss of about R10,000 crore”, Mistry said.
In the recent times, Tata Steel, whose European operations account for two-third of its output, is facing severe challenges as the continent’s economic crisis sapped demand.
Tata Steel wrote down $1.6 billion of mostly overseas asset values, including $1.35 billion for Europe, during January-March 2013 (Q4 of FY13).
Steel demand is 30% lower than the pre-2008 financial crisis levels and the outlook for the euro area continues to be depressed, Mistry had said in a statement earlier.
“We hope that our European operations, which are currently facing a tough time, will come out of the gloomy outlook in another 18-24 months,” he added on Wednesday.
Mistry said the company’s Vietnam project, a proposed steel complex in Ha Tinh — with an estimated capacity of 4.5 million tonnes per year — for which the company signed an MoU with Vietnam Steel Corporation (VSC) on May 2008, has been scrapped.
“We have exited the project due to delays in approval and various regulatory hurdles,” he said.
On the current Indian projects, he said that the company’s Orissa project is currently underway and is slated for production by the end of 2014. The company has already spent R10,000 crore on the project, a 6 million tpa integrated steel plant at Kalinganagar Industrial Complex near Duburi in Jajpur district