Tata Steel expects to return to profit
Tata Steel Thailand, a Thai-listed steelmaking unit of India-based Tata Steel Group, is targeting a turnaround in 2014 after suffering losses in the past two years, by launching more high-quality steel products.
To boost income, Tata Steel Thailand will focus on selling more high-quality steel, including special wire rods, and improving its product mix. It expects to gain 40-per-cent market share of high-quality steel products from the current 25 per cent, said Peeyush Gupta, the newly appointed president and chief executive officer.
He said the company had projected sales-volume growth at 10 per cent for the fiscal year ending March 2013. Its market share in special wire rods is expected to increase to 27 per cent from the current 25 per cent. Its output of that product in the previous fiscal year was about 2.4 million tonnes.
“We are the only steelmaker in Thailand that can produce this kind of special wire rod, which has strong components,” Gupta said.
Tata Steel Thailand, a subsidiary of Tata Steel Group, a global steel manufacturer, is expected to report a slight drop in terms of sale volume and value during the current fiscal year ending March 2012 from last fiscal year’s total turnover of Bt26.75 billion. It also posted a net loss of Bt976 million in the previous fiscal year. The main reason for the drop in sales was the supply-chain disruption caused by the severe floods in Thailand last year.
“However, the company expects revenues to recover this fiscal year and we should gain a net profit within the next two years,” Gupta said.
He believes that Thailand’s robust growth in the construction and automotive sectors will lead to an increase in steel consumption. He expects the volume and value of steel-products sales to grow by 10 per cent next year.
The new CEO said that although the firm had faced some losses in the past two years, it would continue to invest and do business in Thailand, as it foresees high potential for growth. The Kingdom is also considered a strong production base for exports to neighbouring countries in Asean.
Of the total income of Tata Steel Thailand, about 5-10 per cent has been from exports.
Gupta said the firm is considering exporting more steel products in the Asean market.
The firm will invest about Bt90 million to develop its production capacity, focusing more on high-quality steel, as it has created a better margin.
Focusing on high-quality steel is also a strategy to shift competitiveness from cheaper and lower-standard steel from China.
Tata Steel, which owns the Tiscon brand, also warned that more than 40 per cent of steel imported was substandard. He said constructors and consumers should be aware of the problem.
Moreover, the firm called on the government to monitor such substandard steel closely, as it could cause huge losses for the country in the future.
