Tata Steel too indicated that domestic utilities should be ready to deal with the situation and warned that next year could be worse for them.

“Everybody is grappling with the situation. The downturn appears to be more than a normal one and has assumed epic proportions. We cannot begin production by 2012, as we need to watch the situation keenly. Our projects are directly related to India’s growth. We need to re-align the pace of our projects in tandem with the developing scenario. Economic downturn along with credit squeeze is a serious problem,” ArcelorMittal India chief executive officer Sanjay Bhatnagar told The Indian Express. He pointed out that according to reports some producers had announced cuts in their production to offset shooting costs and rising inventories. “Analysts are even saying that growth could even fall to 6-7 per cent. You should be in a situation where you are able to sell your produce. Actually in liquidity crisis you need cash. So I cannot say when we will commence production unless we get a clear macro economic scenario. Till then we can only guess,” he reasoned. However he reaffirmed his company’s determination to go ahead with Indian projects, but is remained unclear whether steel tycoon Lakshmi Mittal’s company would downsize the project in view of the economic downturn.

Echoing similar sentiments, Tata Sons executive director and former Tata Steel managing director J J Irani said, “We definitely are in for a difficult period. We have a tough 2009 ahead and things might get worse before it gets better. It is very important to manage your inventories,” he said on the sidelines of an international conference on minerals and metals organised by the Indian Institute of Metals. He, however, argued that the steel companies having raw material security would have some cushion in dealing with the downturn while those who do not were likely to feel the pinch more. Irani made it clear that the ongoing expansion of Tata Steel would not be affected as finances were in place. Interestingly, he argued cash-rich firms could explore the current downturn to buy cheaper assets to reap the benefits later.

The Indian companies who have reportedly cut their production include Ispat and JSW while state-run steel giant SAIL and Tata are yet to do so.