Tata Steel open to buying stressed assets: Chandra
Tata Steel Ltd is actively looking at inorganic expansion as part of its growth strategy while it aims to ramp up capacity in India, chairman Natarajan Chandrasekaran told the firm’s shareholders at its annual general meeting on Tuesday. At the same time, he warned that the short to medium term focus would be on paring debt.
“We are seriously looking at inorganic growth and scaling (up) the Kalinganagar plant,” said Chandrasekaran. When shareholders asked whether he would consider buying stressed steel assets including Essar Steel Ltd which would give the firm a foothold in western India, he said he was open to everything.
Chandrasekaran’s statement comes at a time when several large steel producers such as Essar Steel and Bhushan Steel Ltd are facing insolvency proceedings due to their inability to service debt. Tata Steel has a current capacity of 24 million tonnes, including its European operations. The production ramp-up at its Kalinganagar facility was one of the reasons the firm swung to profits in the June quarter.
India prospects remains bright for the business and will be the focus market in the near term, Chandrasekaran said, adding the firm has earmarked ₹7,000 crore as capital expenditure for this fiscal.
Still, the firm wants to pare its debt in the short to medium term to a “sustainable” level, he said. Consolidated debt ballooned to ₹87,812 crore at the end of June compared to ₹83,014 crore three months ago.
This has seen the company restructure its European operations over the past several quarters well as explore a merger of that business with Thyssenkrupp AG of Germany.
Indeed, Chandrasekaran also defended the primary reason behind this mountain of debt – the acquisition of Corus almost a decade earlier. He said all allegations levelled by his predecessor Cyrus Mistry were incorrect as the acquisition was part of the long-term strategies drawn up to grow through international acquisitions. “The board was deeply involved in all the deliberations on Corus that took place over multiple board meetings and had approved the acquisition of Corus on a consensus basis,” Chandrasekaran said.