Liquidity crisis and demand slowdown has forced Tata Steel, the country's largest steel maker, to put brakes on its greenfield projects in Jharkhand and Chhattisgarh. However, it will continue with its expansion plans at Jamshedpur and the construction of a 3-million tonne plant at Kalinganagar in Orissa, said Tata Steel managing director B Muthuraman.
"Tata Steel is planning to re-phase capital expenditure for higher return projects such as Jamshedpur and Orissa, while the Jharkhand and Chhattisgarh projects, for which land has not been acquired, have been further delayed due to the current liquidity crunch," Muthuraman said.
The company is looking to increase its share of captive raw materials through acquisition of assets. "We are looking at a project in South Africa, which should start yielding iron ore in another 12 months, while we are pursuing a Canadian company called New Millennium to procure iron ore. These efforts will help us to supply cheaper raw material to Corus," Muthuraman added.
The company, which has $1.7 billion in cash reserves, has no near-term debt to pay. "We do not have any outstanding bridge loans. Ten per cent of debt for Corus has been paid this year and that has given us a repayment holiday till December 2009," said Koushik Chatterjee, group chief financial officer.
"A number of initiatives are being undertaken to save about Rs 300 crore (Rs 3 billion) more from the earlier target of Rs 890 crore (Rs 8.9 billion) through improved efficiencies. The company will not cut back production in India as we don't think that things are as bad as in Europe and the US. We enjoy the benefits because of our quality of steel and will not cut prices too in the near term," he said.
Even in Europe, Corus is trying to cut costs. "We are looking to save about pound 350 million out of which pound 250 million would be through the reduction of employee costs, cancellation of bonuses to the senior management and reduction of temporary workers. The other 100 million pounds will be accounted through corporate level reductions," said Philippe Varin, Corus CEO in a telephonic conversation.