The brownfield expansions of existing facilities will increase production capacity to 47 tonnes. In addition, there are plans to set up a scrap-based electric arc furnace in the north, west and south. “We already have a scrap recycling plant in Rohtak. We are going to build a 0.75MT scrap-based plant in Ludhiana. If successful, we will replicate it in western and southern India, where scrap is available,” said Narendran.
According to Narendran, the cash flow from the India operations is sufficient to support the company’s annual investment plans of Rs 10,000-12,000 crore. “We don’t need to add additional debt for capex,” he adds.
Tata Steel is fully hedged on the iron ore front, thanks to its own captive mines and those acquired as a result of the Bhushan, Usha Martin and Neelachal deals. However, the company imports 80% of its coking coal from Australia and Indonesia. “It is taking longer to expand coal production in the country because of local issues,” says Narendran.
The $12 billion acquisition of Corus in 2007 has weighed down Tata Steel’s consolidated balance sheet for over a decade now. The company tried to cut costs by selling assets and laying off employees. In addition, it also tried to merge/sell the business to other steel companies, including Thyssenkrupp and SSAB. The UK and Dutch companies were finally separated in 2021. Narendran says the company has no plans to increase UK capacity beyond 3MT.
According to analysts at Motilal Oswal, the company’s European operations have improved significantly. Tata Steel Europe reported its highest ever EBITDA/tonne in Q1 FY23. It was more than the Indian business — ₹28,220 compared to ₹21,326.
Narendran wants to accelerate the growth of New Materials Business (NMB) such as composites, graphene and advanced ceramics. The division was formed four years ago to explore opportunities in materials beyond steel and offset cyclicality. NMB’s composites business focuses on three market segments – industrial, infrastructure and rail – with £600m each in sales. Narendran wants to take that to $1 billion a year over the next five years.
The 57-year-old CEO, who is also an avid marathon runner like group chairman N. Chandrasekaran, is racing against time to transform Tata Steel into a global powerhouse.