Rising steel prices and firm demand are likely to prompt India’s Tata Steel to advance its capacity expansion target by few years, a company official said on Thursday, May 5.
If its capital expenditure plans are advanced, the target of an increased installed capacity of 40 million mt per year could be achieved well ahead of 2030, Tata Steel CEO, T. V. Narendran said.
Tata Steel’s installed capacity in India is 20.6 million mt per year, while it achieved production of 19.06 million mt in the fiscal year 2021-22.
The company has lined up capital expenditure of $1.58 billion in the current fiscal year and this will be reviewed after six months and, if required, could be ramped up, he said.
“If the market is good, cash flows strong, and deleveraging continues as planned, we can always go to the company board asking to spend more,” Mr. Narendran said.
“Unlike earlier, when the group had just one site in Jamshedpur the growth could happen only sequentially. Today, we have two sites in Kalinganagar and one in Angul, Odisha - so we have the optionality that tomorrow if the demand in India really picks up and the profitability continues to be fantastic we can grow faster,” he added.
Tata Steel’s plans to ramp up installed capacity to 40 million mt per year in India includes expansion of the Kalinganagar mill to 16 million mt per year from 8 million mt per year at present, which is underway, and expanding the recently acquired Neelachal Ispat Nigam (NINL) site to 10 million mt per year from 1 million mt per year at present once the acquisition process is completed by June 2022.
After acquiring Bhushan Steel now rechristened Tata Steel BSL Limited, its capacity has been expanded from 3 million mt per year to 5 million mt per year and subsequently increased to 10 million mt per year.