By Neha Arora and VarunVyas Hebbalalu
NEW DELHI, May 4 (Reuters) - Tata Steel expects its European operations to improve from the next quarter
on the back of falling energy costs, its chief executive and
managing director said on Thursday.
"Europe is still struggling but things are getting better
because energy prices have come down," T.V. Narendran told
Reuters in an interview.
"So costs are coming down, not yet realised in our
bottomline because we have some hedges on gas prices, which will
play out over the next quarter or two."
Falling demand in Europe and weaker steel prices hurt the
company's revenue in the March quarter.
European operations, which account for roughly 35% of total
revenue, fell about 17% to 220.36 billion rupees ($2.70 billion)
during January-March. The company, backed by India's Tata Group, expects the
ongoing quarter to be challenging for European operations.
However, the Indian market is expected to be stable, boosted by
infrastructure spending.
Narendran said there are incentives in Europe for its push
to make "green" steel or steel made without using fossil fuels,
though in India the company's efforts were voluntary.
The company aims to achieve net zero carbon emissions by
2045.
"Whatever we are doing (in India) is because we think it's
the right thing to do, not because there is an incentive for us
to do so," Narendran said.
Late last month, the steel maker had conducted a trial for
injecting hydrogen gas at its blast furnace in the company's
flagship plant in the eastern city of Jamshedpur. The company has also been exploring the option to raise a
green loan, Narendran said.
Narendran expects prices of steel to remain volatile in the
range of $500-$700 per tonne, and coking coal - a key raw
material - to be between $250 and $350 per tonne.
"Fundamentals are strong in India, we are waiting to see how
China does in the rest of the year."
To steer its troubled assets in the UK, Narendran said the
steel maker has proposed a 50% injection of capital expenditure
from the government, and sought cheaper electricity to support
its transition to green steel.
($1 = 81.7650 Indian rupees)
(Reporting by Neha Arora in New Delhi and Varun Vyas in
Bengaluru)
