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Mr B. Muthuraman, Managing Director, Tata Steel Ltd, addressing a press conference in Mumbai on Wednesday. — Vivek Bendre

Mumbai , Oct 26

SOUTH-EAST Asia and China continue to be Tata Steel's preferred geography for acquisitions. The company would look at acquisitions elsewhere only if availability of crucial raw materials such as iron ore and coal is easy.

"We would look at some of the finishing mills in South-East Asia and China; anywhere else we need to have the raw material availability advantage," Mr B. Muthuraman, Managing Director, Tata Steel, said.

The company had stated that it would look at acquisitions as a means for growth. Tata Steel's focus would be to build a stronger base in India and pursue strategic acquisitions, he said.

Steel companies' profitability, he said, are driven by four factors - cost, volumes, product mix and price. Tata Steel has advantages in these factors. In terms of cost, volumes and product mix the company is constantly working at either controlling them or improving them. Prices of steel, therefore, are not a significant factor for profitability for Tata Steel, he said.

Global steel prices would soften due to `significant inventory overhang', Mr Muthuraman said. World steel production during the January-September 2005 period was higher by 6.3 per cent at 819 million tonnes.

China's production increased by 27 per cent to 255 million tonnes. However, there is a cutback in production in Europe and US.

Global steel demand is forecast to grow by 4-5 per cent during 2005 and 2006. China is likely to remain net importer of value added steel.

"2006 will be a good year for steel companies but there are concerns as capacities are coming up," he said. Higher oil and energy prices are also an issue for concern as is the possible increase in interest rates.

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