With Tisco announcing its Rs 1,995-crore capacity expansion in crude steel, it is a clear sign that the steel sector is indeed looking up. In an interview with FE, Tata Steel vice-president (finance) RC Nandrajog said that the domestic demand during the last decade has grown at an average rate of about 5.5-5.6 per cent, while this year the demand has been growing to about 6 per cent.

The expansion plan, which an industry analyst termed as "a renovation and modernisation expansion", will include the ‘G’ blast furnace which, at present, has a capacity of one million tonne per annum (tpa) and is targeted to expand to about 1.8 million tpa.

While talking about the domestic steel market, Mr Nandrajog said: "India’s consumption varies roughly, based on estimates, of about 26 million tpa to about 27 million tpa and the growth is seen to be about a little over one million tpa."

According to him, the domestic market will itself consume another million tonne of steel or maybe more and it is expected to continue at this rate year after year. "Therefore, India will need steel and Tisco is gearing up for that," Mr Nandrajog added.

When asked whether he felt that the market would be able to sustain another million tonne of steel, Mr Nandrajog replied: "In the early fifties, both China and India used to produce almost a million tonne of steel. China today consumes almost 200 million tpa, while India on the other hand consumes about 27 million tpa. The average consumption per person per year in the world is around 160 million tpa. India’s consumption has to grow."

He, further, stated: "Even if we do not reach the world average of about 160 million tpa consumption as per estimates, we should be consuming something like 50 million tpa with a 100 crore plus population."

Given the current steel consumption levels in India, Mr Nandrajog feels that in the next five-10 years, the consumption should increase to the required estimated level of 50 million tpa. Yet, he cautioned that whether or not it will be consumed, is as good a guess as it is his. However, he affirmed that one million tpa of steel is not a major increase and it can be consumed in a year itself.

The expansion plan will be internally financed by Tisco and will be carried out in a phased manner in the next three-four years.