BackTime has come for Tata Steel to start next leg of expansion: CEO T.V. Narendran
The board of Tata Steel Ltd has already approved a plan to expand the capacity of its Kalinganagar facility by up to 5 million tonnes at a cost of Rs23,500 crore
PremiumKolkata: Time has come for Tata Steel Ltd to start its next leg of expansion, the company’s global chief executive officer and managing director T.V. Narendran said.
The company’s board has already approved a plan to expand the capacity of its Kalinganagar facility by up to 5 million tonnes (mt). The facility currently produces 3 mt of steel a year. The expansion is estimated to cost Rs23,500 crore and is expected to be concluded in 48 months, Tata Steel had said in a regulatory filing on 19 December.
“Kalinganagar has shaped up well," Narendran said in Kolkata on Monday, adding the company was also pursuing growth opportunities through acquisition of existing capacities. The proposed expansion of the Kalinganagar unit will take Tata Steel’s total manufacturing capacity in India to 18 mt.
The company currently sees “great opportunity" to expand in India, and “we are well positioned because we have both organic and inorganic opportunities to grow", Narendran said. Tata Steel has submitted bids for at least three stressed steelmakers: Bhushan Steel Ltd, Electrosteel Steels Ltd and Essar Steel India Ltd.
“It is a great opportunity for anyone in the steel industry (with) the appetite and ambition to grow in India," Narendran said about the acquisition opportunities. To fund its aggressive expansion plans, the company’s board on Friday approved raising up to Rs12,800 crore through a rights issue.
The proposed rights issue will remain open for subscription for two weeks from 14 February, according to the company’s regulatory filings.
In a regulatory filing on 19 January, Tata Steel said it recently raised $1.3 billion, or Rs8,304 crore at current exchange rate, through a sale of unsecured bonds in overseas markets. The proceeds of the issue will be used to refinance the group’s offshore obligations, Tata Steel said.
The Union government’s investments in infrastructure will boost demand for steel, Narendran said. At the same time, investments into building transportation infrastructure such as roads and ports will reduce cost of despatching steel. For the Indian economy to grow at 7-8%, “infrastructure has to grow", Narendran added.
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