Tata Steel plans to weigh-in the option of re-looking at its fresh capex plans given the relentless cheap imports and subsequent pricing pressure in the domestic markets.

TV Narendran, Managing Director & CEO, Tata Steel told businessline that from industry perspective India should be producing steel rather than just exporting iron ore and importing steel.

“I think the current strategy will not create jobs in India. We have made a representation to government. Obviously there are multiple compulsions they need to take care of, because demand growth is no guarantee that it will lead to building capacity,” he said.

Asked whether the company will relook at the planned capex, he said the company is now focused on completing Kalinganagar and Ludhiana projects.

In the next six months, the company will go to the Board with the Neelachal expansion plan, for which an environment clearance has been sought, and go for the mandatory public hearing by November end.

“We will take a call in the next three to six months. Just now we are not stopping anything, but we just want to be watchful because we also want to manage our debt well,” he said.

Capex breakup

Tata Steel has earmarked a capex of ₹16,000 crore in FY25. Of this, it has already spent ₹8,583 crore. The company intends to spend 75 per cent of the capex in ramping up capacity in India, particularly to complete projects at Kalinganagar, in Odisha. The remaining would be spent towards the UK de-carbonisation programme.

“The financial results of steel sector in the September quarter indicates that all companies are under pressure. RINL is already in all sorts of trouble. Going forward, if this continues quarter-on-quarter, then obviously I’m sure everyone will review their capex plans because international markets are not there to take care of excess capacity,” he said.

The Ebitda per tonne of Tata Steel was at ₹13,000, which hovers between ₹7,000 and 8,000 as per data data of peers. Honestly, at these low levels it is very difficult to justify building a brand new steel plant in India, said Narendran.

If Indian steel consumption is growing at 7-8 per cent or 10 million tonne a year, then it makes sense to build only that much of capacity and assuming that that is profitable, he said.

“If it is not profitable to sell steel in India, then why would you invest thousands of crores to build new steel plants in India?” he added.

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