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Export duty is unfortunate. Why should people begrudge an industry or a company making profits? Tata.


Date: 28-09-2022
Subject: Export duty is unfortunate. Why should people begrudge an industry or a company making profits? Tata
“We grew from 10 million to 20 million tonnes in the last seven-eight years. We want to get to 40 million tonnes by 2030 but I am assuming that the export duty will not be there for long because we have always assumed 10-15% will be exported. So 35-40 million tonnes is where we will be by 2030 because it takes a while to build a steel plant but because of our acquisitions today, we can grow at any pace we want, says TV Narendran, MD & CEO,

Tata Steel is strong because of its culture, its people, its commitment and the fact that we have consistently worked on improving ourselves.We have recalibrated ourselves continuously, we continue to be one of the lowest cost producers of steel which ensures that we survive in a down cycle; in the up cycle everyone looks good.

It is what you do in the downcycle which matters and we continue to push our boundaries as far as customer relationships and products are concerned. We do a lot of innovative work in the market place and that helps us protect our revenues as much as we could in a cyclical business while at the same time, being brutally focussed on our costs and efficiencies so that we continue to be one of the lowest cost producers of steel. We also have a long value chain which ensures that we can ride the cycl ..

Tata Steel made all the right headlines last year and record profit. I remember using this phrase on television that steel is the new gold. Will FY23 be a year of slightly rusty or are things looking up? Will steel continue to shine on the path of gold?

First and foremost, this is a cyclical business but what I have always said is that the steel prices in the down cycle in this decade will be higher than steel prices in the downcycle in the last decade, particularly in India, simply because India after a very long time is investing a lot on infrastructure.

Steel is very dependent on micro economic issues and investment led growth; India is traditionally a consumption led growth. This focus on investment-led growth, infrastructure is great for the steel industry in India and India is one of the best places in the world to produce steel. We have iron ore unlike China, unlike Japan, unlike Korea. For many reasons, the steel industry in India and certainly Tata Steel is well positioned to capitalise on.

Diwali, Dussehra, Christmas everything is taken care of. How did you react when first time press compared Tata Steel numbers with TCS NSE 0.75 % for the year gone by?

I think that is a good comparison to have. TCS has been a shining star for the group and for Tata Steel to match TCS – I do not know when we last did that – was a great feeling but honestly we are in very different businesses. As part of the same group, we hope TCS continues to do very well. We are in a cyclical business. We have ups and downs. So it is of media interest more than anything else.

Par nazar lag gai na because after that the export duty came.

That is the unfortunate thing. Why should people begrudge an industry or a company making profits because ultimately private sector investment in India was being revived by the steel industry. The steel industry announced more than Rs 100,000 crore of investments. No other private sector industry had announced that kind of investment.

So somewhere, there were pressures to deal with inflationary issues and we respect that. But somewhere, India should be a big producer of steel, India should be a big exporter of steel. Steel investments happen in some of the poorest parts of the country. We are blessed with iron ore. So this is the classic opportunity to make in India, for India and for the world. So I think it is unfortunate.

We appreciate and respect that it has happened, but we hope that it will be removed soon because China, Japan and Korea together export 150 million tonnes of steel with hardly any iron ore. So why should India, which has iron ore, be worried about exporting 10-15 million tonnes of steel? That is the larger issue and it has obviously hurt the steel companies over the last few months.

Yes we are and like I said, we are one of the lowest cost producers of steel in the world. So we can ride the down cycle as well. As we have shown a few years back when steel price was $350 also. We made money but the challenge this time has been that coking coal prices have been quite high and that is 40% of our cost that is linked to global geopolitical issues. But yes, we know how to survive in a down cycle also.

I am assuming that the real impact of coking coal advantage will only come for the next quarter because what you are burning in this quarter would be coal bought at higher levels?

Absolutely and that is right because normally most of the coking coal comes from Australia. So what you buy today comes to you after two months and it helps or hurts the cost two months later. So there is a lag. Last quarter’s cost will be impacted by the coking coal we bought the quarter before that and the lower coking coal prices will help us from the next quarter.

Source Name:-Economic Times
 
 
 
 
 
 
 
 
 
 
 


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