Tata Steel has recently announced that it is restructuring operations and reducing capital expenditures as it reorganizes its subsidiaries to optimize operational efficiencies. Tata Steel is reducing the number of subsidiaries in Europe from approximately 300 to 180-200 within the year.
CEO TV Narendran noted that Tata Steel has 30 subsidiaries that will be reorganized in four areas to bring simplicity and leverage the synergy and scale of the operating companies. The four areas defined at the moment are long products, downstream, infrastructure and utilities, and mining assets.
Narendran provided the example of Tata Sponge which is to become Tata Steel Long Products and will include the recently acquired Usha Martin company. The shift is expected to simplify the business structure and add shareholder value.
Capital expenditures were announced by the CEO as 25 percent less than the original plan due to the economic slowdown in India. The plan for India and Europe was Rs 12,000 crore (US$ 1.7 billion) and has declined to Rs 8000 (US$ 1.1 billion) crore.
Tata Steel is also focusing on services and solutions at 20 percent revenue potential to strategically insulate itself from seasonality and economic cycle factors in the steel sector.
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