Slowdown sign - TATA Steel to adopt cost cutting measures |
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It is reported that TATA Steel would not go for jobs, expenditure or production cuts in its India operations, despite the fact that it had fixed a cost cut target of INR 5,000 crore in the next 6 months for its slowdown hit European unit Corus.
Mr B Muthuraman MD of TATA Steel justified the steel major's decision to take over Corus, around 2 years back, despite the dismal performance of this second largest steel producer of Europe due to global meltdown, saying that it was a long term decision not entirely based on profit making.
He said that “The company with strong internal base will be able to cope with the situation more effectively. The slowdown was a good thing to happen in the sense that it will wipe out the unethical profiteers.”
Mr Muthuraman said that because of its strong internal structure TATA Steel would not go for any cuts due to slowdown. He said that “Rather we have planned to save INR 2,500 crore at our Jamshedpur plant, the only operational unit in India, by cost savings through increasing our internal efficiency and thus bringing the operational cost down.”
He said that he was less concerned about the prices of steel going down from USD 1,000 USD 500 per tonne than the demand downturn.
Mr Muthuraman said that India is less hit by slowdown than the US and European countries because of its more regulated banking system and less export dependent economy.
Mr Muthuraman further added that “The demand rate in the US and European countries is likely to become negative next year. In India, however, despite going down it would still be positive at 5% to 6%,” adding that despite downturn Jamshedpur plant's expansion to 10 million tonne capacity might be completed before the scheduled date of April 2011.
He also urged the government to take measures to increase liquidity in the system and start a large number of infrastructures based projects at a quick pace to end the effects of slowdown but warned that the companies should not solely depend on the oxygen mask of bail out packages or other government lollypops.
http://steelguru.com/news/index/2009/01/04/NzcyNDI%3D/Slowdown_sign_-_TATA_Steel_to_adopt_cost_cutting_measures.html