Tata Steel is expanding its total capacity to 15 million tonne by 2010. The country’s largest private sector steel maker’s current capacity of four million tonne would be enhanced to nine million tonne in two years, which would include its recent acquisition of the Singapore-based NatSteel for Rs 1,313 crore. The company is augmenting its Jamshedpur facility by three million tonne in two phases of one million tonne and two million tonne over two years. Tata Steel recently signed a pact with the Orissa government to put up a four to five million tonne plant in Duburi. 

Tata Steel director J J Irani said, “We have signed a pact with the Orissa government which has certain progress milestones attached to it.” The mining lease rights will be provided by the government based on the work-in-progress within a timeframe. The Orissa government imposes these ‘progress milestones’ to ensure that steel manufacturers do not exploit the mines without any value addition by directly exporting the iron ore. 

Tata Steel’s first major acquisition outside the country, NatSteel, is expected to act as a beachhead investment for the company in the high growth geographies of China and South East Asia. Through this transaction, Tata Steel will increase its manufacturing footprint to seven new countries in Asia. NatSteel owns steel mills in China, Thailand, Vietnam, the Philippines and Australia. The business is focused on long products and has a cumulative capacity to produce about 2 million tonne per annum of rebars, wire rods, pre-stressed concrete wires and strands. 

The investment also includes a 26 per cent equity interest owned by NatSteel in Southern Steel Berhad, a 1.3 million tonne steelmaker in Malaysia. In calendar 2003, the steel business reported a turnover Singapore $1.4 billion (Rs 38.2 billion) and a profit before tax of Singapore $ 47 million (Rs 1.27 billion).