Tata Steel on Monday said that it was open to further acquisition of stressed assets considering the increased demand of steel in the market.
There is a consolidation going on in the steel business at present following a down cycle of the sector in the wake of which a lot of steel facilities were either forced to close down or operate at a lower capacity.
Those which operated at a lower capacity had to face huge losses, for which there are opportunities to buy assets as a going concern. While Tata Steel is keeping an eye on the National Company Law Tribunal (NCLT), it is also vying for stressed assets, which are eager to make deals out of court like Usha Martin.
“We are eyeing a capacity of at least 30 million tonne by 2025 in India, in view of the assets we have at present,” Ananda Sen, Tata Steel’s president (India operations), said, adding “we are 18.5 mt now, with expansion and new capacities, we expect to have 30 mt capacity in India by 2025”.
This projection is based on the existing assets and projects that Tata Steel has in its hands at present. The company had recently taken over Bhushan Steel and Usha Martin’s steel businesses, which has a combined rated capacity of 7.1 mt. Kalinganagar’s capacity would reach 8 mt after the second phase of expansion, and Jamshedpur plant’s capacity at 13.5 mt would take Tata Steel’s total capacity to 28.6 mt by 2025, Sen said. Bhusan Steel has a capacity of 5.6 mt and Usha Martin has 1.5 mt. Tata Steel has already charted out fresh investments for both the plants but Sen didn’t want to divulge any details.
He said Bhusan Steel is expected to achieve between 4 and 4.2 mt of production in FY19, up from 3.5 mt it achieved last fiscal. Additional raw material is being supplied to the plant for enhancing production.
Iron Ore from the captive mines of Tata Steel has been started to supplying to the Bhusan plant envisioning enhanced production.
However, Tata Steel plans to invest an estimated Rs 1,000 crore to achieve 100 per cent capacity utilisation. “There can be no cost optimisation without full capacity utilisation. Tata Steel at present was evaluating the investment requirement and that could be anything between Rs 500 crore and Rs 1,000 crore,” Sen said.
Taking the European operation into account, Tata Steel’s total capacity at present stands at 27 MT. —FE