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Dear Stakeholders,
I am pleased to present the Corporate
Sustainability Report of Tata Steel for the
year 2005-06. This is our sixth consecutive
report prepared in accordance with GRI 2002
guidelines. Tata Steel was one of the first
Indian companies to adopt the stringent
guidelines under the Global Reporting
Initiatives and our report for the year
04-05 was adjudged as “one of the strongest
reports filed by any corporate from the
emerging economies”.
Business outlook
Globally, steel
consumption and production continued to grow
and economic conditions around the world
have been encouraging. The US saw sustained
GDP growth of over 2% while Japan moved out
of deflationary conditions and Europe has
showed signs of industrial growth and
consumption by the end of the last financial
year. China along with other developing
economies like India are likely to continue
to drive demand growth in steel, while
Europe and US demand is also likely to
remain robust. The outlook for the industry
remains positive though rising costs on
account of raw materials, freight and energy
will keep the margins under pressure.
The Indian economy grew
at an estimated 8.1% in FY06. This includes
a strong performance in steel consuming
sectors like automobiles, engineering,
constructions and white goods. Increasing
foreign exchange reserves and robust
industrial growth indicate that India is at
the inflexion point of development, which
bode well for the domestic steel industry in
the future.
Growth
Tata Steel has developed a long term
strategy of developing a strong base in
India, pursuing the de-integrated production
capability of making intermediate steel in
low cost geographies and finishing in
growing and developed markets.
In pursuing this
strategy, the Company is planning to
increase the production capacity at
Jamshedpur and build several Greenfield
Projects. The Greenfield projects in India
include setting up integrated steel plants
of 6.0 mtpa; 5.0 mtpa and 12.0 mtpa capacity
in Kalinganagar (Orissa), Jagdalpur (Chhattisgarh)
and Saraikela (Jharkhand) respectively. The
Company is also exploring to set up a
2.4mtpa steel plant in Bangladesh and 2.0
mtpa steel plant in Iran. These are in
addition to increasing the capacity of the
existing plant at Jamshedpur to 10 million
tonnes.
The Company has signed a
Joint Venture Agreement with BlueScope Steel
Limited, Australia in November 2005, for
manufacture of color coated coils and
pre-engineered buildings to be used in the
building solution business. The
manufacturing facility to be set up at
Jamshedpur will have a production capacity
of 0.25 mtpa of zinc and aluminium coated
and 0.15 mtpa of color coated coils. The
building solution business would have
manufacturing facilities at Delhi, Pune and
Chennai.
A subsidiary company in
the name of ‘Tata Steel KZN Pty. Ltd.’ has
been established in South Africa for setting
up a Ferro Chrome Project at Richards Bay,
South Africa to produce 0.12 mtpa of high
carbon ferro-chrome.
The Company is also
working towards ownership and development of
additional raw material sources in India and
overseas for its enhanced and sustainable
operations. The Company has entered into an
agreement with AMCI (CQ) Pty. Ltd.,
Australia to secure up to 20% of its coal
production.
In line with the plans of
creating a global presence in existing
business lines through a de-integrated
production strategy, the Company acquired
67.11% of equity stake in Millennium Steel,
Thailand at a cost of approximately Rs.7800
Million during the year. Millennium Steel is
one of the largest steel companies in
Thailand with a capacity of 1.7 mtpa,
producing long products for construction and
engineering steel for auto industry. Tata
Steel has also forayed into organized steel
retailing by opening “STEELJUNCTION” in
Kolkata, a one-stop shop for steel products
like pipe, tube, wire, sheet, builders
hardware, architectural items, lifestyle
products, kitchen products, etc. This will
enable architects, interior decorators and
builders in and around Kolkata to easily
access steel products for their use. In
future, similar hubs may also be set up in
other locations. Over the next decade, Tata
steel has committed itself to attaining
global scale with output of 100 million
tonnes and a strong global presence.
Performance
Tata Steel was ranked as the Best Steel
Making Company by World Steel Dynamics Inc.
USA for the second consecutive time, based
on a study of twenty-two world-class steel
makers. During the year under review,
several initiatives were taken to enhance
its global competitiveness and improve the
economic, environment and social performance
as reflected below. |
