To combat the present low demand scenario for steel in Europe, Tata Steel Europe has formed a team that would suggest the production strategy to be adopted by the company's units there, a top company official said Tuesday.

The steel major is also hoping to produce 14 million tonne during the current year. Tata Steel managing director H.M. Nerurkar said, "there could be downsizing of equipment. We don't know that. The European team is working on it, there would be some restructuring issues, finding new markets, as exports out of Europe is very important now, including to India."

Tata Steel Europe has already seen scaling down of output from its rated 16 mtpa capacity to 14 mtpa in 2011-12.

Nerurkar said the company would try to maintain production at 14 mtpa during the current year.

Tough economic conditions, particularly in Europe, had prompted Tata Steel chairman Ratan Tata to say at the company's annual general meeting on August 14 that tough decisions awaited the company's European operations.

Nerurkar said it was earnestly pursuing its 35000 million crore 5.6-mtpa Kalinganagar project, the first 3 mtpa phase of which is scheduled to be commissioned by March 2014. "Any delay or anything going wrong there (at Kalinganagar) would impact the company adversely," Nerurkar said.

Nerurkar said other than the company's European operations getting affected by the economic environment in that region, costs at home, too, had gone up "substantially" taking the company's net profit down by 89 percent to R598 crore in Q1 FY13 on an year- on-year basis.