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Tata Steel plans to beat volatility with wider value-added product basket

A ramp-up in steel capacity at Kalinaganagar helped Tata Steel clock a 6-fold jump in sales in new sub-segments like pre-engineered buildings, construction & projects and oil & gas, in Apr-Sep FY18

Jayajit Dash  |  Bhubaneswar 

Tata Steel

Tata Steel aims to overcome the volatility in steel business by widening the portfolio of its value-added products. In the April-September period of 2017-18, Tata Steel clocked a six-fold jump in in new sub-segments like pre-engineered buildings (PEB), lifting & excavation (L&E), construction & projects and oil & gas, on the back of a ramp-up in steel capacity at its greenfield Kalinaganagar project in Odisha. After achieving the ramp-up to three million tonnes at Kalinganagar, Tata Steel has gained an entry into the PEB segment and also conducted successful trials, besides starting supplies to global leaders in the L&E space. Additionally, the company has approvals from a leading oil marketing company for the supply of API grade steel. The steel maker has also established itself as a major player in the large-diameter pipeline segment through Kalinganagar. “On getting board approval to expand crude steel output to eight million tonnes per annum (mtpa), our focus will be on creating more value-added products. In the second phase of ramp-up, we are adding a cold-rolling mill at Kalinganagar to specifically serve the requirement of the automobiles sector,” said a Tata Steel source who did not wish to be named. In the existing value-added segments like liquefied petroleum gas (LPG), Tata Steel has enhanced its from 30 per cent to 45 per cent through customer acquisition and service differentiation. For other segments like precisions tubes and MCHC (medium carbon high carbon), the steel maker has enhanced its supplies by accelerated new product development for leading customers. Tata Steel plans to beat volatility with wider value-added product basket The share of branded products to Tata Steel’s turnover has been increasing consistently over the years.

From 16 per cent in 2001-02, the share rose to 50 per cent by the end of 2016-16. In 2016-17, the share dropped to 46 per cent as the process for ramp-up at Kalinganagar was still on. Also, Tata Steel has become the first steel company to foray into the space of branded steel doors. Two new products like solar panels and Smart Bus shelters are in a pilot mode. The new segments that the steel company is looking to tap from its Kalinganagar unit are expected to account for 30 per cent of its total At present, the company’s Kalinganagar facility is servicing the segments like HR (hot-rolled) commercial, LPG cylinders, precision tubes and railways. The hot strip mill (HSM) at Kalinganagar, which is superior to Jamshedpur both in width and tensile strength, is capable of addressing an array of customer requirements, according to the company. Currently, the expansion of Tata Steel’s Kalinganagar facility from three mtpa to eight mtpa, which would cost Rs 23.5 billion, is under way. The project configuration and costs include investments in raw material capacity expansion, upstream and midstream facilities, infrastructure and downstream facilities, including a cold-rolling mill complex. The expansion is expected to be completed in 48 months.

First Published: Sat, January 27 2018. 22:11 IST
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