Responding to the Crisis
Tactical Initiatives
Tata Steel has successfuly preserved cash by reducing net working capital and rephasing capex. In view of the liquidity constraints, capital expenditure outgoings during the year were contained at around Rs. 3,000 crore. Cash generated from operating activities this year came to Rs. 7,397 crore, almost 18% higher than last year.
Inventories were liquidated to release cash. Steel stock was brought down to 28 days by the end of March 2009 as against 71 days at the end of December 2008. Coal contracts were renegotiated and capacities maximised by using cheaper domestic scrap. Output from the large blast furnaces (BFs) was increased and smaller, uneconomical BFs were discontinued.
Efficiencies that led to yield improvement and reduced power consumption were stepped up. The Company bettered the Specific Energy Consumption record set last year by achieving a new record of 6.594 GCal per tonne of crude steel in 2008-2009.
The Hot Strip Mill (HSM) achieved its best ever production of 310,600 tonnes in March 2009 compared to the previous best record of 310,300 tonnes in August 2008. Key enablers have been the Mill Pacing Model and the Shutdown Management practices introduced from IJmuiden, which have improved NOH (net operating hours) and SOW (speed of work). In the January to March quarter, the HSM achieved a yield of 98.18% consistently over all three months, its best ever performance.
Renegotiations with suppliers and lenders led to better deals. An across-the-board cost-cutting initiative targeted and achieved a 15% reduction in general administrative expenses. Training and reskilling programmes to make use of any down periods were set up. Sales in the January-March quarter rose to 1.5 million tonnes.
Strategic Initiatives
Tata Steel’s 2.9 million tonne per annum (mtpa) expansion plans are on schedule. They will increase the Jamshedpur plant’s crude steel making capacity from 6.8 mtpa to 9.7 mtpa, at an estimated cost of Rs. 13,900 crore. The scheduled date for completion of the project is April 2011.
Supporting robust processes and IT development to reshape its business relationships and become a true strategic partner, has been a key initiative.
