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Tata Steel Ltd will tap organic growth and can pace its growth depending on cash flows out of India. Acquisitions will be weighed against existing organic growth opportunities, TV Narendran, MD & CEO, said.
Speaking at an analyst call, Narendran said between the recently acquired Neelachal Ispat Nigam plant and the company’s existing Kalinganagar site, it has 6,000 acres of available land. The two have a current capacity of 4 million tonnes per annum (mtpa); which can be taken up to 25 mtpa. And so, scaling up in a single site is “more attractive than most other options”.
The company also has the option of expanding in Meramandali or Angul, from the current 5 mtpa to 10 mtpa. “When you have that opportunity to scale up in a single site, that’s more attractive... We really don’t need to pursue other options,” Narendran said.
“In addition, we have our strategy of setting up EAFs (electric arc furnaces). So, I think Tata Steel’s growth ambitions can be met through existing sites. And obviously, any opportunity will be weighed against this advantage that we have,” he added, in response to a question on whether the company would look at further acquisitions in India.
Growth plans
According to Narendran, in the last five years, most of Tata Steel’s growth was inorganic. “We don’t need to pursue inorganic growth to achieve our ambitions. We have enough sites which can grow in the existing portfolio. And we can pace our growth depending on the cash flows we generate out of India,” he added.
On a through cycle basis, the cash flows that Tata Steel generates out of India will help it grow here without adding to the company’s debt, he explained.
Expansion of the Kalinganagar unit – from 3 mtpa to 8 mtpa – will be completed by FY24 and plans for expansion of capacity Neelachal Ispat is being worked on.
“We are also drawing up the plans to look at Kalinganagar expanding from 8 mtpa to 13 mtpa, and Bhushan from 5 mtpa to 10 mtpa. But we will decide on how to prioritise and pace those projects or phase those projects based on the situation on the ground,” he added.
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