Tinplate Company of India Ltd (TCIL), a subsidiary of Tata Steel, is looking to ramp up production capacity at an estimated investment of ₹1,800 crore. The company, which has a production capacity of 3,79,000 tonnes per annum (TPA), is looking to put up an additional capacity of 3,00,000 TPA at its existing unit in Jamshedpur.

The expansion project, which received the board nod on Saturday, is expected to be completed in about three years, the company said in a notification to the stock exchanges.

The time period of about three years is based on the assumption that the company would be able to obtain “expeditiously” all regulatory approvals from appropriate authorities concerned. Any delay in obtaining regulatory approvals or events like the Covid might impact project timeliness.

Also see: India must not permit the dumping of low-grade tinplate | Opinion

The company plans to finance the project through a combination of internal accrual or through external funding, including seeking financial support from the promoter (Tata Steel).

“Decision on specific mode of funding will be made by the board of directors at an appropriate time,” it said.

Capacity utilisation

The current domestic market for tinplate is estimated to be around 6,00,000 TPA and has been growing at a compound annual growth rate (CAGR) of around 5-6 per cent. The company, which holds close to 40 per cent of the market share, has a capacity utilization of over 90 per cent.

Tinplate finds usage across a wide range of industries including food (edible oil, fats processed fruits & vegetables), non-food (paints & chemicals, aerosol sprays, battery) and beverages.

The per capita consumption of tinplate in India is low 0.42 kg (as compared to countries like China - 4.75 kg, Thailand - 7.25 kg and Malaysia - 9 kg) and this is expected to provide ample opportunity for growth.

“The company is operating at close to its rated capacity and therefore needs to expand its capacity to meet the growing needs of the market. Tinplate is one of the highest value adding downstream products in the flat product portfolio of integrated steel plants. Tata Steel, the parent company and main supplier of hot rolled coil, has been expanding its capacity and the growth plans of the company are aligned with the growth plans of the parent company,” it said.

Also see: Steel cos seek quality control on tin plate imports

Increasing urbanisation and a change in lifestyle is expected to promote increased consumption of ready-to-eat and ready-to-drink products thereby increasing demand for tinplate packaging. The demand is further expected to improve once the largest user of tin cans, the ‘Out-of-Home’ (OOH) segments return to normalcy with opening-up of hospitality sector as vaccine roll outs gains traction, the company said in its latest annual report.

Exports

The domestic consumption of tinplate decreased by nearly 16 per cent in FY21 due to decrease in demand in Q1 and labour availability issues. Imports of tinplate also decreased by 27 per cent due to the impending Steel & Steel Products’ Quality Control Order and anti-dumping investigation.

The company was however able to compensate the fall in domestic demand by ramping up its exports which grew by nearly 29 per cent YoY.

Exports, which stood at around 69,000 tonnes in FY21, was one of the highest for the company in recent times. It exported 24 per cent of its produce to Middle East, Europe, parts of Africa and neighbouring countries despite the severe shortage of containers, vessels and need for special banking arrangements.

Moving forward, the demand from processed food packaging industry is likely to remain firm and this would augur well for the company.

“Indian food processors and can fabricators have been able to increase their exports and this trend is likely to continue in FY22 with markets in the rest of the world heading towards normalcy. Processed food demand has gone up since the pandemic started in most countries,” the company said in the annual report.

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