TATAs’ EXPOSURE TO TELE­COM AT ~47,000 CR HOW TATAs MADE THE WRONG CALLS IN TELE­COM

Business Standard - - FRONT PAGE - ISHITA AYAN DUTT

Tata Steel will look at all in­or­ganic op­tions to achieve its tar­get of dou­bling ca­pac­ity in the next five years.

Tata Sons chair­man Natara­jan Chan­drasekaran had re­cently said that a delever­aged Tata Steel would be bet­ter po­si­tioned to grow faster and dou­ble ca­pac­ity in In­dia over the next five years, or­gan­i­cally or in­or­gan­i­cally. Asked about it, Tata Steel In­dia and South­east Asia Man­ag­ing Di­rec­tor T V Naren­dran said, “He has set the tar­get for us,” and then elab­o­rated that it would be achieved through a mix of or­ganic and in­or­ganic op­tions.

Kalin­gana­gar would be or­ganic, he said. Tata Steel’s in­stalled ca­pac­ity in Kalin­gana­gar in the first phase is three mil­lion tonnes. It is un­der­stood that the com­pany will be tak­ing up the sec­ond-phase ex­pan­sion to the board for ap­proval in the near fu­ture and that could be three or five mil­lion tonnes.

Naren­dran, how­ever, said that any ca­pac­ity ad­di­tion this year would have to be through the in­or­ganic route. Tata Steel had said ear­lier that it would cash in on the op­por­tu­ni­ties thrown in by the in­sol­vency process.

Among the 12 stressed as­sets un­der the In­sol­vency and Bankruptcy Code, five were from the steel sec­tor. The com­pa­nies were: Bhushan Steel, Es­sar Steel, Bhushan Power and Steel, Mon­net Is­pat and En­ergy, and Elec­tros­teel Steels.

Asked whether Tata Steel would look at as­sets in the east, Naren­dran said, “We are look­ing at all in­or­ganic as­sets.”

The as­sets in the east are Bhushan Steel, Bhushan Power and Steel, Mon­net Is­pat and En­ergy, and Elec­tros­teel Steels while Es­sar Steel is in the west. The size of the as­sets range from 1.5 mil­lion tonnes to 10 mil­lion tonnes.

An an­a­lyst said both as­sets in the west and east would make sense for Tata Steel be­cause an ac­qui­si­tion in the west would give it ac­cess to that side of the mar­ket. “On the other hand, Tata Steel’s mines are in the east. For each tonne of steel, three tonnes of raw ma­te­ri­als are re­quired, so Tata Steel would save on the lo­gis­tics cost if it ac­quires a plant in the east. It can al­ways send the fin­ished prod­uct to the west, but it will save on vol­umes,” ex­plained the an­a­lyst.

At present, Tata Steel has an in­stalled ca­pac­ity of 12.7 mil­lion tonnes and dou­bling ca­pac­ity would mean tak­ing it to 25.4 mil­lion tonnes. “That will not be pos­si­ble through the or­ganic route alone,” said in­dus­try sources. Tata Steel also has ap­proval to add an­other one mil­lion tonne to the ex­ist­ing 9.7-mil­lion ca­pac­ity at Jamshed­pur.

Tata Steel In­dia and South­east Asia Man­ag­ing Di­rec­tor T V Naren­dran

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