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Tata Group Confident of Turnaround in European Steel Arm

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Tata Group Confident of Turnaround in European Steel Arm
London: Indian conglomerate Tata Group is confident of a turnaround in the fortunes of its UK-based Tata Steel Europe, which has won contracts in the UK, France and Saudi Arabia, overcoming the challenging market conditions.

The group, with presence in various sectors such as auto, IT and chemicals, is also stepping up brand awareness activities in the UK, where it is the largest employer in the manufacturing sector, to strengthen its bonds with the locals.

"We have invested a lot in the modernisation and improvement of the (steel) plants, quite significantly in improving the range and quality of specialised steel products in our European plants. It is beginning to show results," Tata Ltd's executive director, David M Landsman told PTI.

He said it has been difficult for the steel sector in Europe as it has contracted quite considerably because of the financial crisis and also due to strong competition.

Yet, he sounded bullish that there would be a turnaround in the fortune of Tata Steel Europe.

"We are beginning to win contracts. We have won rail contracts in UK, France and Saudi Arabia. We have also won construction contracts," Mr Landsman said.

He further added: "There are some infrastructure projects planned in the UK, we want to be competing in some of those like rail lines. There are some good prospects."

The other positive was the ability of energy intensive sectors in the UK to press the government to reduce the burden of 'green tax' that had posed "serious threat to the business in the UK because of the very high energy cost", he added.

"Tata Steel has been playing a leading role with other energy intensive industry like chemicals and glass to press the British government to take some of the pressure off these industries. We have had some significant success when the UK finance minister did make some significant changes to the energy regime (in the Budget)," Mr Landsman said.


He said however that some serious challenges still remain as construction "is still considerably down over where it was pre-crisis".

Last year, weak macroeconomic and market environment particularly in Europe had forced Tata Steel to write off $1.6 billion.

Tata Steel group had reported a turnover of Rs. 84,666 crore from its European operations in 2013-14 as against Rs. 78,012 crore in the previous fiscal. Its EBIT was a loss of Rs. 158 crore in FY14, an improvement on the Rs. 2,425 crore loss in the previous year.

With the steel division is seeing positive signs, while its brands in other sectors such as JLR and Tetley continue to grow stronger, Tata is keen on strengthening the awareness of the group in the UK and Europe to reinforce its bonding and spread 'Tata values'.

Citing the JLR example, Landsman said: "In the case of JLR those investments have paid off handsomely, already financially and in terms of positioning, standing and reputation. People see that we are a positive force and not asset stripper."

It is a long term approach, he said, adding that as the group becomes more global, it is important to be local and committed to wherever it is present in the world.

"We are stepping up our branding activities here, getting alongside people in the UK to tell about the Tata brand. What we want to do is to go alongside people and tell them about who we are," he said.

In order to do that, the group is planning to sponsor events and also launch the European version of the Tata Review magazine.

"We are sponsoring the Hay Literary Festival (to be held from May 22 to June 1), a big event in the UK. We are doing that for the first time. That's interesting, for it gives us a chance to speak to a lot of people," Mr Landsman said.

Elaborating on other awareness plans, he said: "We are about to launch the European version of the Tata Review magazine, focusing on our business here and ideas and issues that will interest our people in Europe."

Admitting that it is a long journey, Mr Landsman said: "It is about people getting to know about who we are."

As per 2012-13 data, Tata Group employs 50,000 people in the UK, which is the largest in the country's manufacturing sector. The group had a direct contribution of four billion pounds in UK's GDP.


Read more about: tata group tata steel
Story first published: Tuesday, May 20, 2014, 13:32 [IST]
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