Tata Steel has planned a capital expenditure (capex) of Rp Rp12,000 crore on its operations in India and Europe during the current financial year, said Chief Executive Officer TV Narendran.

Domestic steel companies are planning to invest Rp8,500 crore in India and Rp3,500 crore for the company’s European operations, Narendran, who is also Managing Director (MD) of Tata Steel, told PTI in an interview.

On Tata Steel’s CAPEX plans for FY23, he said: “We have planned approx Rp12,000 crore capex for the year approx Rp8,500 crore will be spent in India and the remainder in Europe.”

In India, the focus will be on expanding the Kalinganagar project and mining activities, and in Europe, it will be focused on food, product mix enrichment and environment-related capex, said Narendran.

The company is in the process of expanding its factory capacity in Kalinganagar, Odisha to 8 MT from 3 MT.

In addition, Tata Steel will spend approx Rp12,000 crore on inorganic growth in India in the NINL acquisition, he said.

Tata Steel through its wholly owned subsidiary Tata Steel Long Products Limited (TSLP), completed the acquisition of the Odisha-based NINL steel plant one Million Tonnes Per Year (MTPA) for a consideration value of Rp12,000 crores.

Elaborating on European business, he said it had been divided into Dutch business and British business.

“This allows us to run Tata Steel as one integrated company with five key locations, three in India and two in Europe. This provides greater focus at each of our operating locations. The European location has been assigned to be self-sustaining,” he said.

On Tata Steel’s interest in acquiring state-owned Rashtriya Ispat Nigam Limited (RINL), he said the company does not have a large dedicated site for producing long-term products in its portfolio. However, the acquisition of NINL has closed this gap.

Regarding the measures related to duties taken by the government, Narendran said “I really understand and appreciate the government’s insistence on taking the actions they are taking to control inflation. However, in the medium to long term, we must actively position India as one of the best places to produce steel in the world.”

Narendran, who is also part of the Executive Committee of the supreme steel body of the World Steel Association said that the Russia-Ukraine conflict has impacted the global geopolitical order and global economic order and hence the steel industry in various ways.

The pandemic has pushed companies to not only look at cost efficiency in the supply chain, but also to build resilience in the supply chain.

“On the supply side, input costs such as coal costs and gas costs have been significantly affected by the war. Russia and Ukraine together exported around 30 to 40 million tonnes of steel to the global market and that supply was also disrupted. Inflationary pressures arose as a result of the war has disrupted the infrastructure spending plans of governments around the world,” he said.

On the outlook for the steel sector, the industry veteran said the first half of the financial year was disrupted due to the fallout from the Russia-Ukraine war, the COVID-related shutdown in China, and the imposition of steel export duties on India.

“I expect the second half of the financial year to be more positive than the first half as I expect steel demand growth in India to be strong based on the continued focus on infrastructure spending.

“Steel prices will also stabilize after absorbing the impact of export duties. I also expect China to recover from the economic impact of the COVID shutdown in the first half. So overall I am positive about the outlook for the industry for the rest of the year,” said Narendran.

Tata Steel is one of the top three steel producing companies in the country. According to Narendran, the company produces nearly 20 million tonnes in India. According to the World Steel Association, India’s crude oil production will reach 118 million tons (MT) in 2021.

This story has been published from wire agent feed without text modification.

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