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Cracks in ISA as Tata Steel exits

Mansi Kapur in Mumbai | September 15, 2004 11:31 IST

Tata Steel, the country's largest private sector producer, has left the Indian Steel Alliance, the body formed by major producers. But Moosa Raza, president, ISA, who's currently in Dubai, said that he was not aware of the development.

However, sources said that Tata Steel had already sent a letter to the ISA informing it intends to leave the organisation. Tata Steel officials were not available for comment.

Sources familiar with the development told Business Standard, "Tata Steel has decided to not be a part of the ISA. Although the reasons for leaving the organisation are not clear, it is likely that Tata Steel's decision to cut prices by Rs 2,000 per tonne last month, has raked up certain issues."

Tata Steel had announced a price cut by Rs 2,000 per tonne for all its products on August 22, forcing other steel companies to follow suit. Analysts said since Tata Steel has its own iron ore mines, it has a comparative cost advantage over the other producers, who would have to take a hit on their margins with the price cuts.

While Jindal Iron & Steel Company had cut hot-rolled coil prices by Rs 600 per tonne, Essar Steel had reduced prices of HR coils by Rs 560 per tonne and Ispat Industries reduced prices by Rs 500 per tonne.

The Steel Authority of India and Rashtriya Ispat Nigam had also announced price cuts by Rs 1,000 per tonne across all products. The ISA was formed with the motive of addressing the issues of the steel industry with the government and customers.

SAIL, Jisco, Essar, Ispat are the other members of the ISA. The association plans to expand its base and has invited Rashtriya Ispat Nigam to join the body.


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