Tata Steel, one of the top ten global steel companies with an annual crude steel capacity of over 28 million tonnes, has said that its 6-million tpa greenfield steel project in Odisha remained a top priority for the company. Work on phase-I of 3-million tonne capacity is currently underway.
“Capital expenditure on the greenfield capacity in Odisha remains the key priority for the group’s capital deployment and we have spent around Rs.4,500 crore in the first half on this project. We continue to maintain adequate liquidity levels backed by project financing for the planned capex and track the currency movements to calibrate our hedging policy accordingly,” Koushik Chatterjee, Group Executive Director (Finance and Corporate), Tata Steel, said, while announcing Q2 results.
A new subsidiary, Tata Steel Odisha Ltd, has been set up specifically to undertake this project, which is being implemented in two phases of 3 million tpa each. Phase-I is likely to go into production by the end of 2014-15. Major orders for all zones of this phase of the project have been placed and construction work is in full swing.
The group has obtained the necessary land and construction approvals for the two phases of the project with financial closure already achieved for phase-I. The company said that it had successfully finalised the project financing of Rs.22,800 crore with a consortium of 21 banks and financial institutions.
“Our greenfield project in Odisha continues to make good progress though there has been some weather-related disruptions due to the Phailin cyclone and the subsequent floods,” T.V. Narendran, Managing Director, Tata Steel India and South East Asia, said.
The new steel plant, which is coming up at Kalinganagar, will produce flat steel products with an ultimate capacity of 6 million tpa. It will augment Tata Steel’s product range to meet the changing customer needs in segments that the company serves currently. These include automotive, packaging, tubing, construction, appliances and railways.
The Kalinganagar facility will also enable Tata Steel to enter and have a significant presence in segments such as oil and gas, lifting and excavation, infrastructure, defence, shipbuilding, energy and power. This is expected to help Tata Steel to improve its market share in the domestic market in future.
According to Narendran, Overall market conditions weakened during the last quarter, exacerbated by heavy monsoons and the credit slowdown affecting customers. Despite these difficult conditions, the company was able to increase deliveries by 18 per cent over last year and increase market share on the back of strong customer relationships, superior product portfolio and the strength of its distribution network. The rolling facilities of the 3-million tpa brownfield expansion at Jamshedpur ramped up to full capacity towards the end of the second quarter. The Southeast Asian operations have stabilised and should deliver strong performance over coming quarters.