October 08, 2004 | Indian Express

Tata Steel well poised to face the future

Tata Iron & Steel Co, the largest and oldest private sector steel company in the country, is aiming to become a major player in the domestic steel industry. It also wants to be a global player while keeping its roots deep in domestic soil. According to the managing director of the company, B Muthuraman, Tata Steel plans to increase hot metal production from 4.47 million tonnes (MT) in 2003-04 to 15MT by 2010. "It would be done through capacity expansion at the Jamshedpur plant, acquisition of other plants, and setting up of new plants," he said.

Why this growth plan by Tata Steel, which reported over Rs1,746 crore net profit in 2003-04, on a turnover of Rs10,843 crore? Observes Tata group chairman Ratan Tata, who is also the chairman of Tata Steel: India presently is going through an economic up-turn, and at this particular time in the nation's development, considerable attention is being paid to the creation of adequate infrastructure to meet the country's development needs.

Industry is also experiencing robust growth in several sectors and India's agricultural sector has continued to show growth with improved productivity and product quality. It can therefore be assumed that if these trends continue, India will continue to enjoy healthy economic growth for some years to come.

The Centre for Policy Research (CPR) released in November 2002 a report dealing with the perspectives up to 2025. It indicated that the construction, cold-reducing and transportation of oil and gas segments are poised for major growth in India. Thermo-mechanically treated (TMT) bars and rods, structurals, hot rolled (HR) and cold rolled (CR) coils, plates and pipes have been identified as the key growth products. So, Mr Tata believes that the demand for steel in India should continue to rise, both in construction steel and in flat products used in automotive and consumer product sectors.

India also has a specific advantage in that as its iron ore and related mineral resources are plentiful, which will provide the Indian steel industry with a particular global advantage. Mr Tata has laid a clear vision for the Tata Steel management in this change scenario: It must explore ways of enhancing its capacity domestically, as also establishing finishing facilities in strategic locations internationally, leveraging its low cost Indian base and the availability of domestic iron ore.

As estimated by the Union Steel Ministry, the country will require 60MT of steel against the present capacity of 36MT. And Tisco wants to contribute as much as possible. So, it has drawn up a five-pronged strategy:

  • Maximise the potential at Jamshedpur

  • Move up the value chain with strong brands

  • Establish alternative locations in India

  • Establish global presence

  • Connect domestic and global operations

Mr Tata believes that the company needs to evaluate and invest in new emerging steel making technologies, so as to enable it to be state-of-the-art steel making facility. The company has framed a growth and globalisation plan. This includes:

  • One MT expansion at Jamshedpur by 2005

  • 2.4MT expansion at Jamshedpur to be commissioned by 2008. It has entered into a limestone joint venture in Thailand for establishing low cost material sources globally. It is making a plan to set up a deintegrated production facility in Orissa

  • A ferro-chrome project in South Africa which is expected to be commissioned by 2006

  • It is setting up a coke plant at Haldia in West Bengal

  • It has taken up the Dhamra port project in Orissa

  • It is looking for acquisitions in India and overseas.

  • It has already signed an agreement with NatSteel in Singapore to acquire steel business interests in Singapore, China, Malaysia, Thailand, Australia, Vietnam and the Philippines.

In 2003, the steel business of NatSteel reported a turnover of Rs38.2 billion and profit before tax of Rs1.27 billion. The acquisition is a significant step in Tata Steel's globalisation initiative, and will act as a beachhead investment for the company in high growth geographies of China and South East Asia. As a part of the 1MT expansion at Jamshedpur, a new sinter plant no: 3 will be commissioned in December 2004. The upgradation of its 'G' blast furnace will be completed by January 2005, balancing facilities in steel making will be commissioned by March 2005, and the new re-bar mill by September 2005.

For the 2.4MT expansion, Tata Steel plans to add a number of facilities:

  • Two coke oven batteries

  • A sinter plant

  • Two blast furnaces

  • Third LD converter for steel making

  • A thin slab caster

  • A power plant

  • Expansion of iron ore mine

  • Development of water, utility and power distribution system.

Tata Steel seems comfortably poised to face the future. The company will continue to play a leading role in the industrial development of the country.