Steel sector faces challenge of tying up funds: Tata Steel MD

The steel industry faces the biggest challenge of tying up ₹12 lakh crore required to meet the target of adding 200 million tonnes of production capacity over the next 10 years, said TV Narendran, Managing Director, Tata Steel.

Speaking at an industry event organised by FICCI, Narendran said banks are over exposed to steel industry and returns from this industry have not been so great. Both the new players and existing companies should be conscious of this challenge, he said.

On the employment that can be generated by the steel industry, he said an integrated steel plant moves four times materials for making steel. For instance, he added, the 10-million tonne Tata Steel plant in Jamshedpur moves 40 million tonnes of material which includes 30 million tonnes of raw material and 10 million tonnes of finished product. This generates employment for people both within and outside the company, he said.

Naveen Jindal, Chairman, Jindal Steel and Power, said world-wide prices of raw materials have fallen sharply with coal alone tumbling 75 per cent while iron ore prices have been going down on a daily basis. In India also prices have gone down but not in equal proposition.

“There has been no taker for coal world-wide but in India we are paying a premium because of the artificial scarcity. Most of the steel companies out of desperation have bid so high in the auction I really do not know how they will sustain,” he said.

CS Verma, Chairman, SAIL, said the demand for steel would remain strong in the coming months with the Government thrust on ‘Make in India’ programme and its vision to increase the contribution of manufacturing sector to GDP to 25 per cent to 16 per cent in next five years.

“The Government should take efforts to restart mining in the Jharia coal field to improve the quality of coal supply,” he said.

Seshagiri Rao, Joint Managing Director, JSW Steel, said the Government should allow only companies with end use plant to bid for the iron ore mines whenever it is put on auction.

Narendra Kothari, Chairman, National Mineral Development Corporation, said the company has set a target to achieve iron ore production of 35 million tonne against a record output of 30.7 million tonnes last fiscal.

Iron production at the Bailadilla mine in Chhattisgarh would start in next few months as the trial production has commenced last month.

The mine has a production capacity of 7 million tonnes. Another mechanised mine of seven million tonne in Karnataka will go on stream by August, he said.

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