Tata Steel to propose expansion of Kalinganagar unit

Profitability should be good for steel companies especially during in the second half of the fiscal; and Tata Steel is likely to place the possibility of expanding its Kalinganagar unit, in Odisha before its Board within “six months”.

According to TV Narendran, Managing Director, Tata Steel and Chairman, CII Eastern Region, 2015 was the “worst” year for the (steel) industry globally. And in 2016, the first three-four months was tough followed by increase in raw material prices.

But between July and December of 2016 there has been a balance between the finished product and raw material prices.

This apart, stability in coking coal prices and iron ore prices will also contribute towards improved profitability.

“So I would expect the steel companies globally to have a better H2 (October to March) than H1. When you look at April to March this year to the year ago period, steel companies across the world should do better. And Indian companies would mirror that,” he pointed out during a media interaction on the sidelines of CII summit.

Iron-ore prices, although more stable than expected, are still a “bit strong”.

“While I wouldn’t say we have caught up all the costs as an industry; I would say we are closer to balance than we were at the end of H1 (Sept),” he said.

“If coking coal and iron ore prices continue to be at this level, I think the upside continues to be there for steel prices,” he added.

Domestic Demand

Narendran maintained that he was quite positive about the domestic demand for steel.

“There has been a bit of a hiccup because of demonetisation. Some of the consuming industries (for steel) are affected. But, I think, January to June to be a typically good period for steel consumption and we don’t expect it to be any different from that,” he pointed out.

However, he did point out that Tata Steel was “not significantly” affected by demonetisation.

Minimum import price going off will not significantly impact the industry because international prices currently are above it. With international prices firming up, Indian companies have resumed steel exports.

“If imports come in they will be at international price, which is fine,” he pointed out.

Expansion Plans

The company, Narendran said, will also propose the expansion of its Kalinganagar unit.

The unit currently has a capacity of 3 million tonne per annum; and the plan is to expand it to 8 million.

“It will take us three to four years to complete the expansion once we get the clearances from the Board,” he said without mentioning the investments.

Tata Steel will also look at adding another one million tonne capacity to the existing 10 million tonne per annum capacity at its Jamshedpur facility.

“We have already got the environmental clearances,” Narendran maintained.

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