Talking about the business outlook for the company going forward, in an interview with CNBC-TV18, TV Narendran, MD of Tata Steel said that most of the big expenditures are done with and cash flow are expected to be better, which going ahead will help brind down debt.
Below is the verbatim transcript of the interview.
Q: How is the pricing scenario currently?
A: The factor which will impact prices is what is happening in China. China last year has not been as bad as we had imagined, in fact originally the World Steel Association had projected that consumption of steel in China will shrink. It has actually grown by 1 percent and 1 percent swing in China is a big impact because that is a significant amount, it is 8-9 million tonne. So we are waiting and watching, seeing what is happening in China, things are more positive than we had imagined and China is expected to export less this year than they did last year. Last year was peak at around 120 million tonne. This year may be closer to 100 million because for a long time China has been exporting 50-60 million tonne. If they were only exporting that much then the balance would come back to the world steel industry.
Q: The NPA and the debt situation is something which has been a big concern for the steel sector as a whole. Where do you stand in terms of your debt reduction plan and as you enter FY18, by how much can you bring down debt. What is the strategy right now?
A: I wouldn't comment at a specific level but directionally most of the big expenditure is behind us as far as Kalinganagar is concerned. So we are back to normal level of spending and we think our cash flows will be better than that and that should help us bring down the debt, but how much extra is what I wouldn't comment right now.
Q: As far as the European operations are concerned, I understand that you wouldn't want to go into detail but there have been some reports on ThyssenKrupp pulling out of the likely discussions and the tentative discussions with Tata Steel. Can you tell us or give some clarity on are the discussions with Thyssen still on?
A: The discussions are still on. There were some comments from the unions in Thyssen but as far as Thyssen is concerned, the management of Thyssen and management of Tata Steel continue to talk to each other.
Q: A question on demand scenario - I agree that there has been some form of a pickup but how sustainable is the demand pick up in the sector?
A: Globally, the exciting areas are India and south-east Asia, if you look at it from global perspective because these are 70-80 million tonne of consumption of steel growing at 7-8 percent.
China, as I said was expected to shrink but if it is from minus one to plus one - that is a 15 million swing. So China is not shrinking as much as one had imagined, in fact it is growing positive. What is interesting is Commonwealth of Independent States (CIS); Russia, Ukraine etc, are starting to do better than before. Latin America is still struggling but the worst is behind us in Latin America. There is a lot of interest in US because the Trump administration announced that they are going to spend a lot on infrastructure and the US which is a huge market for steel, starts picking up which has been shrinking for the last few years. It has been shrinking primarily because of oil prices and investments coming down in shale gas but if infrastructure expenditure in the US picks up - that's good for the steel industry. Europe is also slowly picking up, it is on positive growth. So globally the steel industry or the World Steel Association feels that the worst is behind us. The concern areas, maybe countries like Korea where the steel consumption is shrinking.
However, most regions which were shrinking are no longer shrinking and most regions which were not growing are starting to grow. So directionally it is positive but having said that I do not want to get too much of optimism because there is also a lot of excess capacity floating around.
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