Tata Sons to up stake in group cos

"We have realised that the funds invested for acquisition of shares did not flow into the company. But we do not have any other alternative as financial institutions do not favour a preferential allotment," Tata said.

Tata was hinting at the stand taken by the financial institutions, led by IDBI, which had blocked ACC’s preferential allotment to the Tatas. "We have purchased shares wheneverit was available in the market. Frankly speaking, we do not have any other option," Tata said. During 1998-99, Tata Steel sold 25 lakh shares of Telco to Tata Sons.

According to Tata, there are signs of recovery in many sectors and this has led to firming up of steel prices in both the domestic and international markets. "Although the oversupply situation still continues, we have reasons to be optimistic that realisations will increase in the near future," Tata said.

Although steel imports have not been large in quantitative terms, it battered down the realisation of domestic steel makers. "Last year we had to take a beating on the realisation to keep our capacity going," Tata said. The company’s marketshare for flat products, as a result, has gone up by almost three per cent. Tata Steel is striving to become a globally competitive company and is looking at expanding in its core business of steel, he said. The company has initiated a major cost-cutting drive and is benchmarking itself against Korean majorPosco, which is among the lowest cost steel producers.

The company will commission its 1.2 million tonne cold rolling mill at Jamshedpur, which is based on technology from Nippon Steel, by June next year. "Once the economy recovers, the steel industry will be among the first to bounce back. The only way out at this stage is to stay competitive," Tata said.

To stay competitive, the company has already shelled out around Rs 500 crore on its ongoing VRS programme. In a bid to contain the ballooning wage bill, the Tata Steel has been struggling to reduce its massive work force.