‘European biz is no longer a cash drain’: TV Narendran

After reporting its highest ever profit and revenue for Q1FY22, Tata Steel Ltd is racing ahead with its deleveraging and growth plans.

After reporting its highest ever profit and revenue for Q1FY22, Tata Steel Ltd is racing ahead with its deleveraging and growth plans. In an interview, TV Narendran, chief executive and managing director, Tata Steel, said the current cycle in the steel segment has not only accelerated its efforts to deleverage, but also ensure its European operations are not a drain on the company. Edited excerpts:

TV Narendran, chief executive and managing director, Tata Steel, said the current cycle in the steel segment has not only accelerated its efforts to deleverage, but also ensure its European operations are not a drain on the company. (Mint)

Is this boom in the steel industry sustainable?

I think there are some structural changes that have happened, hence, I am not predicting that steel prices will stay forever. However, fundamentally we believe that structurally the industry is in a healthier place. In the last cycle when things were good, everyone invested in capacity, including China. But that era is over. The only country that is adding capacity now is India. However, in India it’s not easy to add capacity. We believe that the balance between both demand and supply would be better maintained now and, hence, we will continue to invest. Outside India, we will be self-sufficient, and those businesses will manage by themselves.

What is driving demand?

Fundamentally, infrastructure is going to be the biggest driver of consumption. The government is spending more on infrastructure than it has ever done. Any infrastructure you build is steel-intensive, as construction accounts for 60% of steel consumption anywhere in the world. Also, as consumption grows in automotive, appliances, etc., steel demand will grow. Growth will also come from the focus on piped water for everyone. If you are going to have the oil and gas network being built in India, that is a positive, too.

Will you be looking at both organic and inorganic growth?

We would be looking at both. For flat products, it will be organic.

Also, as a company, we believe that for flat products, fewer, but larger sites is the right way to go. For long products, it will be fragmented, so there will be different ways to grow for us. Organic opportunities are there for us particularly in Jamshedpur and Usha Martin sites.

The other is inorganic opportunities. We are participating in the process of Neelachal Ispat Nigam Ltd whenever it comes out. We are growing through the recycling route in long products. We have set up India’s first recycling facility in Rohtak, which is now operational. We are looking to convert scrap into steel in northern and southern India.

Are you still looking at exiting your European operations?

We are not under any pressure to exit these businesses. There were two drivers for it. One was that a consolidated steel industry is good for Europe. But the competition commission at that time thought otherwise. So, there was no point pursuing consolidation if it does not get regulatory clearance.

The second driving factor was our need to deleverage and our need to not have the European business be a strain on growth opportunities in India. The European business is no longer a cash drain on us. However, in future if there is an opportunity, we will consider it on merit.

Full interview on livemint.com