Tata Steel rejigs capex plans as crunch bites

25 Nov 2008

TATA Steel, India’s largest steelmaker, will continue with its Rs 27,000-crore plan to expand capacity at Jamshedpur and build a new plant at Orissa, while it will push back other capex plans and greenfield units at Jharkhand and Chattisgarh due to the liquidity crisis and slow demand.

Tata Steel is planning to expand its Jamshedpur capacity by 3 MT to 10 MT by 2010, at an estimated cost of Rs 12,000 crore. It also has plans to build a 3-MT plant at Kalinganagar in Orissa at Rs 15,000 crore. The Orissa unit would be the first phase of a 6-MT plant. The financing for these two projects has been completed and land has also been acquired in Orissa. The liquidity crisis and slow demand has, however, prompted the company to push back its other plans that includes its units in south-east Asia and Europe.

Tata Steel had proposed to invest about Rs 42,000 crore for a 12-MT integrated steel plant in Jharkhand, while in Chattisgarh, it would build a 5-MT steel plant in two phases at a cost of Rs 16,000 crore. The company had acquired Anglo-Dutch steelmaker Corus in 2007 for $13 bn that catapulted Tata Steel as the world’s sixth largest steel company by capacity. Recent demand concerns in the US and Europe have prompted Corus to cut production by about 30%, while also cutting about 400 jobs at its distribution business in the UK and Ireland. crackcrack
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