Steel demand to grow by 8%
With an annual crude steel production capacity of over 28 million tonnes per annum (MTPA), Tata steel is among the top ten global steel companies. HM Nerurkar, managing director, Tata steel in a tête-à-tête with Binny Sharma talked about steel demand, upcoming Kalinga Nagar steel plant and expected investments by the group in the current year.
Steel sector is facing rough weather on a variety of fronts. While Asia presents a better picture, European and American market continue to be in the grip of the slowdown. At what rate do you expect the steel demand to grow in domestic and overseas market this year?
So far we speculate domestic steel demand to grow by 8 percent this financial year. We expect European steel demand to grow at around 2-3 percent this financial year, so it is unlikely that our plants would operate at full capacity. Due to sluggish demand in Europe, the company expects to run its European units at 80-85 percent capacity in current fiscal.
What has been the steel production target set by your Group for the current fiscal? By when will the upcoming steel plant at Kalinga Nagar in Odisha start its operations?
Tata group has plans to produce around 8 million tonne of steel in the current year . As new capacity at Jamshedpur expansion is almost complete, we will start our operations there in the last quarter of this year with the increased capacity.
As far as Kalinga Nagar Steel plant in Odisha is concerened, the first phase of the upcoming steel plant will start its operations by March next year. The commissioning will be somewhere between October, 2012 and March 2013. The first phase will have a capacity of 3.5 million tones and in second phase the Kalinga Nagar steel unit’s total production capacity will increase to 5.5 million tonnes per annum.
How much has Tata Group invested at Kalinga Nagar Plant so far?
The company has invested over Rs 11,000 crore in the new plant, which will produce flat steel products. The company has kept a capex of about Rs 4,000 crore ($800 million) this year for the Kalinga Nagar unit.
The company had earlier said that it has kept a capex of $2.5 billion (about 12,500 crore) for the current fiscal on its existing and expansion activities. With two new plants (Kalinga Nagar and Jamshedpur expansion) coming up, what has been the company’s borrowing plan for the current year?
We will reply to this query after two months as we have not yet firmed up that. There are lot of options in next two months, and we will finalise it. With Odisha steel plant and Jamshedpur expansion, we will require lots of funds.
Apart from focusing on your steel plants in India, what are your current year plans for overseas market?
We have plans to invest about £400-500 million this year and over the next three financial years on our European unit to continue to upgrade its facilities there.