Management Discussion and Analysis
H) Other Business Units
a) Ferro Alloys and Minerals Division (FAMD)
FAMD produces two types of chrome ore, namely lumpy
ore and friable ore, from its mines located in Orissa. Chrome
concentrate, a beneficiated product is produced in the chrome
ore beneficiation plant at Sukinda, Chrome ore is used in the
ferro alloy plant at Bamnipal and other conversion plants to
produce high carbon ferro chrome. The division also produces
manganese ore from the manganese mines in Joda, which is
used in making ferro manganese at the ferro alloys plant at Joda,
and silico manganese at other conversion agents.
Industry Overview:
The stainless steel output grew by 16.7% to 28.4 million tonnes
in 2006. Asia Pacific, predominantly China, was the major growth
engine with a production of 5.3 million tonnes in 2006 as
compared to 3.2 million tonnes in the previous year.
The increase in global stainless steel production resulted in
increase in global ferro-chrome consumption by 12.2% at 6.6
million tonnes in 2006. Asia continues to account for more than
half of the total global production and consumption of ferro-chrome. Asian ferro-chrome consumption increased by 16%
to 3.6 million tonnes as compared to 3.1 million tonnes in the
previous year.
Global manganese alloys business also registered a significant
growth in line with the growth in carbon steel, again led by
China. Manganese alloys production reached an all time high
of about 12 million tonnes as compared to 10.5 million tonnes
in the previous year. The Global production of high carbon
silico-manganese reached 6.9 million tonnes in 2006.
Operational Performance:
The Operations of FAMD registered a strong performance
during the year under review in respect of mineral and ferro
alloys production. Gross excavation of Sukinda chromite mines
increased by 3.8% to 13.65 million tonnes as compared to 13.15
million tonnes in the previous year. Concentrate production
increased by 4% to 465,000 tonnes. Ferro alloys plant at Joda
achieved its best ever production of 51,020 tonnes during the
year. The year also witnessed the highest-ever alloys production
through conversion at 159,000 tonnes.
Sales of manganese ore in the domestic market
increased by 17% to 365,000 tonnes. Total manganese
alloys sales increased by about 50% to 54,000 tonnes.
Exports of chrome concentrate increased by 10% to
500,000 tonnes.
b) Tubes Division
Overview:
Tubes division produces three categories of tubes namely
Commercial Tubes used in Plumbing, Irrigation and Process Industry, Precision Tubes which cater to the Boiler and
Automotive sectors, and Structural Tubes supplied to the Infrastructure sector.
Operational Performance:
The Tubes division witnessed increase in production by
17.5% to 309,932 tonnes. Tube sales increased by 17.6% to 302,905 tonnes. Structural Tube and Precision Tube sales
increased by 65% and 21% to 58,334 tonnes and 58,839 tonnes respectively.
A series of marketing initiatives were undertaken for achieving
better customer service and market focus. These include:
- Launch of “Structura Directions” – An initiative driven
to build on relationships with key opinion leaders like
architects / consultants by providing a platform for sharing
knowledge on best practices.
- Vendor managed inventory and Customer Service Team
initiatives made progress with Precision Tube customers.
- The Retail Value Management journey was completed for
the entire country, which has enabled optimal restructuring
of the retail network leading to enhanced reach.
With Theory of Constraints (TOC) initiatives in the area of supply
chain and distribution, the division achieved superior level of
compliance, customer satisfaction and lower inventories.
The first phase of modernisation has been completed with
the commissioning of a new 3” Commercial Tube Mill, a 4” Precision Tube Mill and a state-of-the-art Cold Drawn facility.
With this, the in-house production capacity has increased
from 230,000 tonnes to 325,000 tonnes.
c) Bearings Division
The domestic bearings industry has been growing at around
7% per annum in the last few years. Current Installed capacity
of bearings in India is 320 million nos. India imports around
120 million nos. mainly from Eastern Europe and China.
Tata Steel’s Bearings Division achieved a capacity utilisation of
120% and increased its production by 7.2% to 30 million nos.
Sales increased by 5.8% at 28.97 million nos. as compared to
27.38 million nos. in the previous year. There was pressure
on prices of bearing products due to excess supply in the
market during the year. Cost of raw materials increased by
around 8% over the previous year, but the negative impact
was mitigated largely through increased capacity utilisation
and improved manpower productivity.
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