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On the back of increased demand for steel from the auto sector, Tata Steel said on Friday that it will increase production of auto-grade steel by 20 per cent to 1.2 million tonnes this fiscal.
The steelmaker expects to continue a similar capacity increase in auto steel across the next few years, while also starting operations at a new 0.6 million tonne capacity joint venture plant with Japanese steelmaker Nippon for high strength auto steel by 2013.
“In 2010-11, we supplied one million tonnes of auto grade steel and this year we are aiming to touch 1.2 million tonnes. We have to increase capacity every year by 15-20 per cent to meet the growing demand from the auto sector,” Mr H.M. Nerurkar, Managing Director, Tata Steel, told Business Line .
He was speaking at a meeting held for honouring the company on its selection as the only Indian firm in Fortune magazine's 2011 list of World's Most Admired Companies.
Tata Steel's supplies make up for over 40 per cent of the domestic steel sourcing of the automotive industry in India. Having added a new 0.3 million tonne cold rolling mill at Jamshedpur, it is also increasing the capacity of an existing mill from 1.5 million tonnes to 2.2 million tonnes, he said.
Asked for an outlook on steel prices, Mr Nerurkar said that prices are not likely to go up this month or in July.
Riversdale stake sale
Tata Steel also said that the net debt of the company has come down to $9.5 billion from $10.5 billion. This is because cash reserves have increased to over $3 billion after the steelmaker received $1.12 billion (A$1.06 billion) from the stake sale in Australian mining firm Riversdale.
Last week, Tata Steel sold its entire stake of 26.27 per cent to Anglo-Australian mining giant Rio Tinto after the latter announced plans to delist Riversdale after taking over control of the company this April.
On how the company plans to utilise these fresh funds, Mr Koushik Chatterjee, Group CFO, Tata Steel said, “This money will go into the general pool and the Board will take a decision on how to use this. We have no loan payments due immediately, though we have separately announced large capital expenditure plans for the year.”
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