Chairman's Statement
Dear Shareholder,
The past year
marked the third year in succession of buoyant worldwide steel demand
and prices. Consequently, the steel industry, considered not so
long ago as a “sunset” industry, saw a spate of capacity
growth plans and consolidation on the expectation that demand buoyancy
would not lose momentum in the near future.
China continued
to be the main engine of growth for the global steel industry, accounting
for nearly 40 per cent of the incremental growth in the world’s
steel consumption over 2004. Similar strong consumption trends were
seen in major steel markets, including the U.S. and Japan. The net
result was a continued acute shortage of raw materials and firm
steel prices worldwide, providing steel companies with unprecedented
profits. Although the growth momentum in China is expected to be
maintained for some more time due to its large investments in new
infrastructure, the global steel industry should bear in mind that
with the industry’s growing reliance on China, any slow down
in the rate of growth of China’s demand for steel would have
an immediate, and significant adverse impact on the demand and on
prices of steel.
The Indian
economy remained upbeat during the year with brisk industrial activity
in major steel consuming sectors like automobile and consumer durables.
In line with global trends, domestic prices too ruled firm for the
second year running.
Against this
backdrop, Tata Steel had another outstanding year. Its profits were
nearly double the previous year’s, reflecting not just the
substantial increase in realisations over the year but also the
continued benefits from its ongoing thrust to rationalise costs,
improve productivity and enrich its product mix.
The Company’s
management believes that the steel industry in India will continue
to see robust growth in the near term and has, accordingly plans
to increase its production initiated from 4 million tonnes to 15
million tonnes, over the next five years.
The key elements
of its strategy also encompass securing raw material supplies in
an environment of increasing scarcity, expanding the production
of semi-finished steels domestically to support further finishing
in selected geographies closer to the consuming markets. Towards
this end, Tata Steel initiated international joint ventures for
securing limestone supplies, committed itself to nearly doubling
the capacity of the Jamshedpur plant and to setting up a greenfield
venture in Orissa and Bangladesh, and acquired the Singapore-based
NatSteel with multiple production units in the growth markets of
South-east Asia and China. The Company intends, by continuing its
strategic thrust in the coming years, to transcend its current limitations
of size and single-point location, and grow to achieve a meaningful
presence in the region.
As always,
the greatest strength of Tata Steel has been its people and their
spirit in overcoming challenges deemed impossible by others. However,
Tata Steel must guard against any sense of complacency and should
continue the good work it initiated in earlier difficult times to
ensure that it retains its leadership position. As Tata Steel now
stands on the doorstep of scaling new heights, I am confident that
its ceaseless commitment to learn and to improve itself will once
again help it achieve its goals.
Chairman
Mumbai, 6th June, 2005
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