Tata Steel will start production from its greenfield plant at Kalinganagar in Odisha from the last quarter of next fiscal.

“Kalinganagar project is going on. It will start production from the fourth quarter of next fiscal,” Tata Steel Managing Director T V Narendran told PTI.

The Odisha project is the second integrated unit of the home-grown steel major in India after Jamshedpur, where it recently completed brownfield expansion to enhance the capacity to 10 million tonnes per annum (mtpa).

The Kalinganagar project, which will essentially produce flat products, will have 3 mtpa capacity in the first phase. This would be doubled in the next phase.

Flat products are mainly used in automobile and consumer durable sectors, the demand for which has not increased on the expected lines during the current fiscal due to subdued economic growth.

Narendran, however, is hopeful of demand for steel picking up next fiscal by at least six per cent as the country’s economy is projected to grow by 5-7 per cent.

“Next year’s GDP forecast is 5-7 per cent. Typically, steel demand grows by 1.2 to 1.3 per cent of the GDP growth. If the GDP growth is 5 per cent, I am expecting demand should grow by 6 per cent,” he said.

Steel consumption grew 0.5 per cent in the country during the first 10 months of the current fiscal due to subdued economic growth.

Narendran said the subdued steel consumption growth during the current fiscal is mainly due to poor demand for commercial vehicle and construction segments as they were “struggling’’.

While the construction sector accounts for 60 per cent of India’s steel consumption, the contribution from automobiles sector is around 15 per cent.

“If you look at it, most the growth in the GDP has come from the agriculture segment. That’s why steel demand did not grow much,” he said.