Tata Steel may consolidate mineral biz to raise capital

 "Under Tata Steel, all these assets are housed. There is opportunity to restructure interests in various subsidiaries, especially overseas, and see how we can reorganize to create a larger entity. We would then look at new raw material opportunity, which we can then combine and work," said Koushik Chatterjee, Group CFO, Tata Steel.

Clearly, what is playing on Tata Steel's mind is the huge valuations that mining companies are getting worldwide. Though, we don't have the details, sources said that they would also look at listing this mining company abroad.

In terms of prices, the government is not letting them hike prices. CNBC-TV18 asked B Muthuraman, MD of the largest private maker of steel in India whether he would increase prices despite the government's problem with inflation and despite the problem it has with steel makers hiking prices. He clearly said that in order to compensate for the increase in high cost of raw material, they would have to increase steel prices by nearly Rs 4,000-6,000.

Muthuraman said, "I believe that the prices need to be raised somewhere in the region of Rs 4,000-6,000 a tonne. That is the kind of price increase that is needed to cover the cost of not only raw materials but of inland freight rates, which have gone up because of fuel price increases. Some companies are inland, some are on the board and some own iron ore. All companies have suffered input cost increases and it is very difficult for them not to pass on these to customers."

In a very clear vindication of their stance, they were criticized for the Corus acquisition for paying more for it. They said that the USD 450 million of cost synergies that they had initially targeted will far exceed that. So, it is a positive gain for Tata Steel.

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