Accepting that last year was a tough one for Tata Steel, Ratan Tata, chairman of the world?s sixth largest steel producing company, says the next 12-18 months are likely to be difficult and challenging for the company. Ratan Tata, in the company?s 102 nd annual report 2008-09, stated, ?Tata Steel has taken aggressive steps to meet the challenges of these difficult times through major initiatives in cost reduction, process improvement and production rationalisation. The highest priority is being given to expanding steel producing capacity to 10 mtpa in Jamshedpur, and ensuring raw material security for the European operations which do not have captive iron ore and coal resources.?

The company plans to increase self-sufficiency of raw material to 50% for Corus in the medium to long term from 25% currently. Observing that the economic revival in India is taking place faster, Ratan Tata expressed his concern on the recovery in Europe. ?Many believe the US economy has bottomed out, but that UK, Europe and Russia may fall still further. The general view is that an economic recovery in the Western world would probably only be in late 2010?, he said in the report.

Last month, Tata Steel raised $500 million through a sale of global depositary receipts (GDR) to fund domestic expansion and overseas mining ventures and is reported to raise another Rs 5,000 crore by selling securities in India and overseas. With $1.9 billion of cash and cash equivalents as on March 2009, Tata Steel?s near term focus is on the implementation of the ?fit for future? restructuring in Europe. The company believes that profit of its European arm Corus would be nearly 60 % in its consolidated revenues in the current fiscal as compared with 70% in 2008-09. B. Muthuraman, MD of Tata Steel on Thursday indicated that the company?s operations in Europe could be hit harder than in South East Asia due to the global meltdown. But he exuded confidence that Tata Steel was in better placed in India as the demand was good.

Last year Tata Steel?s ?weathering the storm? initiative resulted in cash savings of ?712 million ($1.02 billion). ?Fit for future,? programme expects improvement in operating profit of ?200 million annually. Liquid cash and cash equivalents on the books as on March 31, 2009 was $1.9 billion and net consolidated debt was $9.9 billion. Tata Steel?s shares on Friday were marginally up by 0.31% to close at Rs 456.20 on the Bombay Stock Exchange.

Tough time

• The highest priority is being given to expand steel producing capacity

• Steps have been taken for cost reduction and production rationalisation

• The company plans to increase self-sufficiency of raw material to 50% for Corus

• Tata Steel raised $500 million in July through GDRs