Tata Steel bets on expanding steel demand to double its capacity


MUMBAI: Tata Steel is betting on expanding steel demand to double its capacity to 40 million tonnes. Having reduced debt by Rs 18,000 crore, Asia’s oldest steelmaker plans to resume its expansion plans at its existing facilities in Odisha and Jharkhand.

“Expansion within the three sites in Angul, Kalinganagar and Jamshedpur will allow the company to grow from the current capacity of 20 million tonnes per annum to 40 million tonnes per annum,” Managing Director T.V. Narendran told ET.

Kalinganagar can grow to about 15 – 16 million, Angul to 10 million and Jamshedpur to 14 million, Narendran added.

Brownfield expansions should hold down costs.

“When you expand at the same site you bring the cost down significantly. And globally, if you look at steel companies, the most efficient sites are typically in the 15 million-20 million tonne range,” said Narendran, adding that it is why the company wants each of the sites to be world-class and globally competitive.

Tata Steel has restarted work on a pellet plant and cold-roll mill complex expansion at Tata Steel Kalinganagar. It was halted due to the lockdowns. The expansion of the Kalinganagar plant to 8 mtpa from 3 mtpa will incur a cost of around Rs 25,000 crore, the company said.

In 2018, Tata Steel acquired (formerly known as Bhushan Steel Limited) through its wholly-owned subsidiary. Tata Steel is India’s fifth-largest flat steel producing company with an existing capacity of 5.6 million tonnes.

During FY20, Tata Steel Jamshedpur, Jharkhand, produced 10.19 mt of crude steel.

With the rise in demand and back-to-back steel price increases, Tata Steel was able to reduce consolidated net debt by Rs10,325 crore to Rs 86,170 crore. And it plans to reduce the equivalent of another $1 billion in FY22.

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Tata Steel is also currently reorganizing its India footprint and folding listed and unlisted subsidiaries into four clusters to drive scale, synergies and simplification and to create value for all stakeholders.

The business clusters are long products, downstream, mining and utilities & infrastructure. The boards of Tata Steel Long Products,

and Indian Steel and Wire Products (ISWP) approved the merger of Tata Metaliks and Indian Steel and Wire Products into Tata Steel Long Products.

Tata Steel BSL’s merger into Tata Steel is underway and the merger of Tata Metaliks and ISWP into Tata Steel Long Products is ongoing.

“BSL merger with TS could be effective from 1st April 2021, subject to regulatory approvals. The management refrained from a tax synergy quantum and we highlight this would positively impact cash flows and balance sheet from FY 22 onwards,” said Ritesh Shah, research analyst at Investec.

Narendran said the reorganisation process will end in a year or two.

“The reason some of these things take a bit longer is that some of them are listed companies; so we need to go through the process. Some of them are joint ventures. So there are many procedural issues we need to take care of to fulfil our intent,” Narendran said.





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