Management Discussion & Analysis
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b) Tubes
In FY 2007-08 the Tube Industry in India grew at a rate of around 4%-5% over FY 2006-07. The Automotive industry, a customer of the Tubes industry, witnessed a slowdown, with the two wheeler segment completing the year with a negative growth of 7%. The construction sector, on the other hand, grew at a robust 10%-12% with large investments in Infrastructure.
In FY 2007-08 the Tube Industry in India grew at a rate of around 4%-5% over FY 2006-07. The Automotive industry, a customer of the Tubes industry, witnessed a slowdown, with the two wheeler segment completing the year with a negative growth of 7%. The construction sector, on the other hand, grew at a robust 10%-12% with large investments in Infrastructure. Sales volume at the Tubes reached a level of 323k tonnes in FY 2007-08, a growth of 7% over FY 2006-07 (303k tonnes). The sales growth was experienced primarily in the Structural Tubes sector (46%) and Precision Tubes sector (7%) partly offset by a negative growth in the commercial sector (6%). The growth in the Precision Tubes sector could have been higher but for lower offtake by the Automotive industry. The trend of the sales growth in the Tubes division can be seen in the above chart. The growth in sales volume over the last two years was made possible through capacity additions and modernisation.
In line with the modernisation effort, the division brought in 80 new products 60% of which have been commercialised. The operating performance of the division in terms of production and sales volume is shown in the following table:
| Sales | FY08 | FY07 | Inc./(dec.) | Inc./(dec.) % |
| Commercial Structural Precision |
169 87 66 |
184 63 63 |
(15) 24 3 |
(8%) 38% 4% |
| Total | 322 | 310 | 12 | 4% |
| Sales | ||||
| Commercial Structural Precision |
172 88 63 |
184 60 59 |
(12) 28 4 |
(6%) 46% 7% |
| Total | 323 | 303 | 20 | 7% |
c) Bearings Division
The Automobile sector is the key consumer of the Bearings Industry. This sector, which had robust growth over the past few years, experienced a negative growth of over 4% during FY 2007-08. Lower offtake by auto industry, fresh capacities in the industry and increased in imports due to appreciation of the Rupee put severe pressure on the realisations of bearings.
The Division’s major target customer segments of motorcycles and three wheelers had a negative growth of 8.56% and 10% respectively. As a consequence, sale of bearings declined by 5%, recording 27.61 million numbers. Bearings production during the year was 26.36 million numbers.
The following table shows the production and sales of the division during FY 2007-08 and FY 2006-07:
Figures in million tonnes
| FY08 | FY07 | Inc./(dec.) | Inc./(dec.) % | |
| Production Sales |
26.36 27.61 |
30.01 28.97 |
(3.65) (1.36) |
(12%) (5%) |
During FY 2007-08, the division also enriched its product mix by making 29 types of new bearings.
2. Corus Group [Tulip UK Holdings (No. 1) Ltd.]
Corus’s liquid steel production in FY 2007-08 was around 20 million tonnes. In Europe, Corus is the second largest Steel producer. Corus has four main operating divisions; Strip Products, Long Products, Distribution & Building Systems and Primary Aluminium. Europe, principally the EU, is the most important market for Corus for both its steel and aluminium products, accounting for 81% of total turnover in FY 2007-08. The steel division accounted for 96% of total turnover in the same period.
In the FY 2007-08, about 55% of Corus’s crude steel production was rolled into hot rolled coil. Most of the remainder was further processed into sections, plates, engineering steels or wire rods, or sold in semi-finished form. Approximately 35% of hot rolled coil was sold without further processing, approximately 55% was further processed in cold rolling mills and coating lines and the remainder was transferred to Corus’s tube mills for the manufacture of welded tubes. Principal end markets for Corus’s steel products are the construction, automotive, packaging, mechanical & electrical engineering, metal goods, and oil & gas industries.
Corus’s aluminium operations are entirely related to the production of primary metal for external customers. This production arises in two smelters, at Delfzijl in the Netherlands and Voerde in Germany.
3. NatSteel
A wholly-owned subsidiary of Tata Steel, NatSteel Asia is one of the top steel providers in the Asia Pacific. Tata Steel acquired the steel business of NatSteel Ltd. in 2004.
The gross finished steel production of NatSteel for the FY 2007-08 as compared to FY 2006-07 is shown below:
| FY08 (million tonnes) | FY07 (million tonnes) | Change (%) | |
| Gross Finished Steel Production | 1.75 | 1.68 | 4% |
NatSteel’s operations cover South East Asia, Australia and China. The economic growth of the region continues to be robust though there is some trepidation on the impact of the sub prime crisis.
- During the year the production increased in all the locations; the major contributors being NatSteel Xiamen (China) – 105K (39%), Singapore – 68K (10%); Natvina (Vietnam) – 40K (50%); Best Bar (Australia) – 29K (40%).
- The construction activities continue to be strong in most of the markets in the region. The strong demand of construction steel and high prices has also increased the input price of scrap although the scrap-rebar spread remained at a reasonable level.
4. Tata Steel Thailand
Tata Steel (Thailand) Public Company Limited (TSTH), established in 2002, is the largest steel producer in Thailand. It has three subsidiaries viz. NTS Steel Group, Siam Iron and Steel Company (SISCO) and The Siam Construction Steel Company (SCSC). TSTH manufactures long steel products and has an installed capacity of 1.70 million tonnes of finished steel per annum. Tata Steel acquired 67.66% equity in Millennium Steel (now Tata Steel Thailand) in 2005.
During FY 2007-08, the Company, through various improvement initiatives in operations, surpassed its rated capacity in liquid steel making all its 3 plants and recorded its highest ever production, both in terms of billets as well as finished bars and wire rods. The production attained is as under:
Figures in million tonnes
| NTS |
SCSC | SISCO | Total TSTH | |
| Steel Plant Capacity
(Liquid Steel) Production in 2007-08 Rolling Mill Capacity (Finished Steel) Production in 2007-08 |
500,000 538,189 800,000 602,501 |
500,000 573,059 500,000 489,834 |
200,000 274,470 400,000 286,863 |
1,200,000 1,385,718 1,700,000 1,379,198 |
The Company recorded a production increase of 243,000 Mt of finished goods and sales increase of 316,000 Mt, over the previous year.
5. Tata Metaliks Limited
Tata Metaliks became a subsidiary of Tata Steel Limited with effect from 1st February, 2008. Earlier the Company used to be an Associate of Tata Steel Limited.
Tata Metaliks is engaged in the business of manufacturing and selling pig iron. Its plants, located at Kharagpur
(West Bengal) and Redi (Maharashtra), consist of five Mini Blast Furnaces and related facilities including Captive Power Plants.
During FY 2007-08 the production statistics of the company were the following:
| Kharagpur | Redi | Total | |
| Hot Metal Pig Iron |
343,284 349,869 |
178,140 195,632 |
521,424 545,501 |
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