Tata Steel plans Rs 100,000 crore expansion

After acquiring NatSteel Asia, Tata Steel Ltd is looking to take over one more steel plant in South East Asia and plans to invest Rs 1,00,000 crore (Rs 1000 billion) to set up three greenfield projects in India, besides doubling capacity of the one at Jamshedpur.

"We are going for one more acquisition in South East Asia which will be finalised in another three to four months," B Muthuraman, company managing director said.

Without divulging any further details, he said the plant they propose to acquire has a capacity of about two million tonne per annum.

The company had earlier acquired NatSteel Asia with a similar capacity. Giving details of the company's expansion plans, Muthuraman said that it would invest Rs 1,00,000 crore in the next 12 to 15 years for setting up three greenfield steel plants, besides expanding the capacity of its existing plant in Jamshedpur.

The three greenfield plants would come up in Jamhedpur, Orissa and Chhattisgarh.  With this investment Tata Steel's total steel producing capacity in India would go upto 33 million tonne.

The second plant in Jamshedpur, for which the company signed an MoU with the Jharkhand government on Thursday, would have 12 million tonne per annum capacity and would come up at a cost of Rs 42,000 crore (Rs 420 billion).

Muthurman said the company would put up a six mt per annum capacity steel plant in Orissa and another plant with 5 mt capacity in Chhattisgarh.

The company had already signed MoUs with the Orissa and Chhattisgarh governments respectively for this.

On expansion of its existing plant in Jamshedpur, Muthuraman said the capacity would be increased to 10 mt from 5 mt at a cost of Rs 11,000 crore (Rs 110 billion) in two phases. The first phase of expansion to 7 mt was already underway.

To a question on sourcing of iron ore, he said it would not be a problem as the Jharkhand government had given assurance on supply. About its proposed plant in Bangladesh, Muthuraman said it was still in the evaluation stage.

Referring to steel prices, the Tata Steel MD said it would go up in the second half of this fiscal due to hike in raw materials cost.

However, he said current prices were higher and felt it should come down. "A good company can earn good profit by selling products at prices less than present market rates," he said, adding that high steel prices was not a healthy sign.