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Business – Q&A Tata Steel MD Hemant Nerurkar

MV Ramsurya

Tata Steel’s new managing director Hemant Nerurkar seems set to experience a baptism by fire. A slowing steel market in Europe amid growing Tata Steel MD, Hemant Nerurkar
resentment from labour unions, rising prices of raw materials, tackling local opposition jittery about an Orissa plant and battling environmentalists at a forthcoming port project, Mr Nerurkar has his plate full. But that is a familiar territory for this metallurgical engineer from Pune, who has been with Tata Steel for the past 27 years. Mr Nerurkar, who took charge of the Kalinganagar steel project in Orissa in 2004, when local opposition was at its peak, has faced varied challenges in his almost three-decade stint with the Tatas. Taking charge of the country’s largest steel company, at a time when the steel industry is just about recovering from the downturn, Mr Nerurkar outlines his views in a first-ever interaction with the media after taking over as managing director.

The situation in the second quarter of this fiscal year is hugely different from that last year. While in 2008, Tata Steel saw record net profit aided solely by the more than doubling of steel prices, this year a sharp erosion in prices was reflected in the 50% fall in Q2 net profit. How would you describe the situation, and how long would it take for the sector to improve?

The situation in Europe is bad. According to global industry estimates, steel consumption in the US and Europe will fall back by seven years. Although the slide has stopped, recovery will take some time in those markets. But it isn’t that bad in Asia. Steel demand is actually growing in China and India. But this growth in the sector is currently skewed. While it has fallen in Europe and the US and other western markets, the increase in steel demand in China and India and other emerging markets has maintained the overall consumption. There will have to be some tough measures and improvements in the way operations are done and the way markets are addressed.

Corus has hogged attention of late. And the unions too have been vocal in their opposition…

Strong measures can never be easy. It is very difficult to adopt such steps. But such things have to be done differently. Keeping the communication channels open and explaining the situation is very vital. You have to adopt a human approach in such situations. But, I don’t want to say much, as Corus is scheduled to make an announcement next month.

The growth in demand has put pressure on raw materials. How would Indian companies cope in this rush for resource assets, especially as China has also been very aggressive, and so have been other countries?

Indian companies will certainly find it difficult, but I don’t think there are other issues (such as Western interests thwarting moves by Chinese and Indian firms to own such assets). The only factor that is important here is the kind of confidence that the group has enjoyed. The Tatas have a reputation that is known worldwide. The rush for resources will definitely put a (upward) pressure on prices. So, that makes it all the more imperative to own such assets. Tata Steel has always operated with captive resources and that is the reason we have been lowest cost producers.

You have been in charge of Tata Steel’s Orissa project. The opposition to the project has been strong and widespread…

There are about 1,200 families living at the site (of Tata Steel’s proposed steel plant). Of these, only about 200 people are opposing the project. And that too on factors that don’t sound convincing. It’s surprising and mysterious because the same families have relatives in Sukinda and Noamundi (where Tata Steel has mines), where they’ve seen how the Tatas take care of displaced people. If you compare the condition of the people living at the site, it is certain that these people have been misguided. But we are sure things will change. The steel project is close to taking off.

The port project (at Dhamra in Orissa) has also seen lot of opposition from environmentalists, who have alleged that the project will destroy the turtle population.

It is unfortunate how such a myth is being spread. It is also unfair that in a joint venture, only one partner has to face the entire blame. (The port project at Dhamra is a joint venture between Tata Steel and L&T). We are working closely with International Union for Conservation of Nature (IUCN), a premier body for conservation of wildlife. We have always been prepared to talk to environmentalists on the issue, but they have not been forthcoming. Sadly, nobody talks about the large number of turtles that get killed by fishing trawlers.

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October 28, 2009 - Posted by | Uncategorized |

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