Review of Operations

Marketplace Initiatives

The performance of the Steel division in the marketplace has been exemplary and many new initiatives were undertaken to “weather the storm”, especially in H2 FY 09.

In the automotive segment, market leadership was maintained and accolades were won from Hyundai, Tata Motors and Toyota. Approvals have been received from new auto companies like Nissan and Volkswagen.

In the construction segment, TATA TISCON increased its share of business with the enterprise account and key customers from 19% in H1 to 30% in H2 through innovative contracting and better availability of material. Tata Steel also increased its focus on government projects and Tata Group companies to spread the customer base. Its sales to the government and the Group companies increased from 14 kt in H1 to 41 kt in H2, this year. In the Galvanised steel roofing segment, TATA SHAKTEE improved its market share by 1% over FY 08 with best ever premium at consumer level of 22% compared to 18% in FY 08.

Despite the slowdown in key consumer areas, TATA Steelium was able to retain its market share at 18%. This has been achieved by acquiring new customers into retail untapped areas, aggressive forays into retail through exclusive shops called Steelium Zones. Customer relationship building programmes were undertaken in the area of knowledge and safety.

In the construction retail segment, the TATA TISCON brand pull and strength of the channel were displayed through a 22% increase in sales in H2 FY 09 over H1 FY 09 maintaining its consumer level premium at approx. 15%. Regular monitoring of stocks and disciplined replenishment to each of the 1700 dealers has ensured that its Due Date Performance (DDP) has improved to 93% with channel stocks of less than 15 days. High Inventory turns for distributors and dealers helped in improving channel motivation. Continuous monitoring of consumer sales gave early warning signals to launch marketing initiatives and consumer schemes to boost retail sales. TATA TISCON is the first rebar in India to be awarded the “Superbrand” status in the construction rebars category.

Recognising the stimulus being given by economic packages, a special drive was taken to pursue sales to government funded projects and the Railways.

In the Flat Products exports, the Company maintained its focus on the SAARC market with regular and long-term customers. It also encashed the window of opportunity and increased the volume in the spot market, like China and Korea by more than 2.5 times. Recognising the urgency, it operated from 5 ports vis-a-vis 2 ports in FY 08 and tracked the highly volatile Forex markets closely and booked covers at peak rates.

In Long Products, it exported 51 kt of wire rods and 91 kt of billets in FY 09, an increase by more than 3 times over the previous year. With the increase in availability of billets and the sudden downturn in the domestic market in H2 FY 09, exports helped in stabilising the home market. The exports to the SAARC countries were 66% higher than the previous year, mainly driven by higher realisations in this region. It exported a total of 70 kt of billets to NatSteel to maintain the cash within the Group and reduce dependence on the domestic market. One of the major highlights of H2 has been the remarkable drop in working capital from the September 2008 levels to end at 28 days of inventory for finished and semi-finished stock and 9 days of debtors at the end of March 2009.