Tata Steel overseas plants also back to high utilization – TV Narendran

New Delhi: Tata Steel has returned to 100% capacity utilization in India and its overseas plants are also getting closer to normal production, according to Mr T V Narendran, CEO and Managing Director, Tata Steel Ltd. Speaking during AIMA’s LeaderSpeak programme, Mr Narendran said that while the company’s plants in India, Singapore and Thailand were nearly at full utilization, its UK and Netherlands plants were back to 70%-80% production. “The next year will see a strong demand for steel,” he said.

Mr Harsh Pati Singhania, President, AIMA and Vice Chairman & Managing Director, JK Paper Ltd moderated the online session with Mr Narendran. Ms Rekha Sethi, Director General, AIMA anchored the session.

Steel sale in India may be lower by 20% at present but China’s rapid recovery has helped global steel industry, according to Narendran. He points out that Tata Steel and other Indian steel makers were able to recover after initial lockdown by exporting steel to China, which recovered sharply after April. However, with China’s own steel production coming back and India’s domestic demand for steel recovering, Tata Steel is no longer exporting to China.

Tata Steel has responded to the deteriorating geopolitical relations between India and China by starting the process of identifying alternative sources of consumables and capital equipment. However, says Narendran, the shift in supply chain cannot be overnight, as it takes 1-2 years to run trials and scale up sourcing from new vendors. “We want to avoid being vulnerable to geopolitics, even if we have to pay 20%-30% extra,” says Narendran, adding that even if India and China relations improved tomorrow, Tata Steel would still have alternative suppliers.

Atmanirbhar Bharat policy will help India’s manufacturing sector, according to Tata Steel CEO, as it would allow Indian producers to scale up. The electronics factories that are being set up will use steel, he points out. “Steel consumption in India will grow at the rate of GDP growth,” he says.

He argues that Indian manufacturing can be competitive, as was shown by Tata Steel exporting steel to China at profitable prices during the crisis. However, he says that Indian companies cannot be competitive by themselves, as they need the government to ensure competitiveness outside the factory. He points out that Tata Steel incurs more cost in transporting steel from its Jamshedpur factory to Mumbai than the cost incurred by Korean companies in shipping steel to Mumbai.

The recovery in the manufacturing sector will be better than in the services sector, and the recovery in the rural economy would be better than the recovery in the urban economy, Narendran predicts. However, the sustainability of the recovery, which is currently driven by pent up demand, would require continuous nurturing, especially in the infrastructure and the MSME sectors, which have been affected by the crisis.

Mr Singhania cautioned that covid was still around and a return of restrictions could not be ruled out, as has been the case in Europe. He said that a prolonged caution on the part of producers and consumers could lead to slow economic growth in the medium term and the government could accelerate its investment to create immediate demand. Alternately, the government could leave more money in the hands of companies and consumers to encourage investment and spending.

Tata Steel has benefitted from investing in technology skills of its leadership and by sending them to technology and innovation centres across the world, says Narendran. The company has invested in sensors, analytics, AI, AR, VR etc and currently more than 100 algorithms are used in Tata Steel’s daily operations, according to him. The company is also starting a new work policy for its workforce, allowing remote work on regular basis, which will allow the company to tap talent among women who want to work from home.

Ms Rekha Sethi pointed out that the crisis had changed the attitudes towards work and workplace and even government officials were available for video meetings.

The programme was streamed on social media channels also and more than 1,000 people participated in it.