With the commencement of its 6-million tonne per annum integrated steel plant at Kalinganagar, Orissa, Tata Steel hopes to double its revenue growth in the next five years. The company, planning huge capacity expansion in the next five years, says government policies should be more conducive for setting up steel plants and availability of raw material, Managing Director H M Nerurkar told Nayanima Basu. Edited excerpts:
What are your expansion plans in the next five years?
At the 10-million tonne per annum stage, which we will be reaching in 2011, about 65 per cent of our production will comprise flat products and 35 per cent long products. The new plant at Kalinganagar will produce flat products. So, by 2015, our product profile will be flat heavy, to the extent of around 70 per cent.
This is required as we need to match the requirements of our relationship customers, particularly in the automobile sector.
There is also a rapidly growing demand for flats from the construction sector, stronger than we had anticipated. We will have to expand the capacity of Tata BlueScope, our joint venture with BlueScope of Australia in construction solutions. More, the export market for flat products is also opening up.
Do you have any near-term investment plans? How much of a revenue growth have you envisaged for the company within the next five years?
Our $8-billion investment in the Orissa project is underway. We are also planning investments in other states, where we are in the initial stages. In the next five years, we would double our revenue growth with our Orissa project on stream.
Are you planning for another share sale in this financial year, to support your expansion plans?
We have been looking at various ways for raising funds to meet our growth requirements. There are no immediate plans to raise equity but we keep looking at our options from time to time.
What are your plans for Riversdale Mining? Are you scouting for more such ventures for acquiring coking coal assets abroad?
Coking coal is a key raw material for Tata Steel. As our steel-making capacity goes up with the planned expansion projects coming onstream, it would require more coking coal and a captive source would be important. Tata Steel continuously looks out for and monitors coking coal assets across the globe and would continue this thrust.
What are your plans for Tata Steel Europe (TSE)? Are you also planning for its capacity expansion?
The plan for TSE is raw material security and improvement in product mix. We have not planned for capacity expansion.
Are there any plans for joint-venture partnerships with domestic as well as foreign players?
Tata Steel enters into JVs with suitable partners who are compatible culturally and otherwise, and where we believe we can create a win-win situation for both. The JVs could be driven by different considerations such as technology, marketing or distribution channels, access to customers or geographies, etc.
What are you views on the projects stalled due to environment restrictions? Do you think if this persists, India will be able to meet the rising demand for steel in the next decade?
I expect the steel industry in India to grow at seven-eight per cent year-on-year for the next five years. Domestic steel production is expected to touch 100 million tonnes by 2015. This capacity can only be achieved through new steel plants. Government policies will have to be conducive for the setting up of new steel plants and availability of raw materials. Focus on steel-intensive construction will boost the poor per capita steel consumption. Government investment in the much-needed infrastructure segment will also boost the industry.
How do you view the growth of the Indian steel industry and what should be done to match the growth levels China has achieved?
I expect the steel industry in India to grow at 10 per cent year-on-year for the next five years and, as I said, domestic steel production is expected to be close to 100 million tonnes by 2015. Capacity expansion at a rapid rate and intensification of steel use are the only ways of reaching the growth levels in China.
Do you see a massive rise in the demand for high value and high strength steel in India? Do you feel India has not been able to realise the usage of steel fully, compared to other countries?
In the natural growth curve of the developing countries, the use of high strength and high value steel increases as technological sophistication takes place. India is also at the point of inflection where, after this, the use of such steel products would only increase.
Moreover, with the country fast turning into a global auto hub, the use of advanced steels is expected to increase. With a per capita steel consumption in India around 50 kg and with the world average being around 180 kg, India has, however, not been able to realise the full usage of steel as compared to other countries.