Tata Steel is looking at cashing in on the turnaround in automobile sales and is fast preparing the groundwork to create capabilities in manufacturing critical components for high-end cars for the domestic market, a senior official told dna.
"The perceptions (about economic revival) are changing. And if the economy starts growing, demand will certainly start improving. I am sure the automobile companies are now looking at ramping up their volumes and we are creating our capacities accordingly," Kaushik Chatterjee, group executive director (finance and corporate) told dna.
In an important move to create steel components for premium cars, which so far were mostly imported, Tata Steel has just commissioned a new Rs 2,750 crore advanced auto grade steel production facility of 600,000 tonnes in joint venture with Nippon Steel and Sumitomo Metal Corp.
The facility at Jamshedpur is country's first continuous annealing and processing line to produce advanced, high-strength steel.
"We are now capable of producing high-strength components for high-end cars with the commissioning of our JV with Nippon Steel," Chatterjee said on the sidelines of the annual general meeting of subsidiary Tinplate Co of India.
Car sales grew for a fourth straight month in August with Society of Indian Automobile Manufacturers expecting car demand to rise by 5%.
However, some analysts see this estimate as conservative and predict 8-10% growth in FY15, linking the scenario to the previous strong economic growth phase when passenger car demand grew by 20-25%.
With hopes of further upsurge in automobile sales, Tata Steel is already gearing up to meet that demand from auto-makers with a focus now on top-end auto models that requires precision engineering and high strength.
In fact in FY14, Tata Steel's sale of automotive and special products had gone up by 15%, despite a 5% decline in overall auto market.
In terms of capacity, the commissioning of Tata Steel's Kalinganagar facility, especially the cold rolling mill that would come up in the second phase, will produce advanced high strength steels offering auto makers light weight higher strength steels with better fuel efficiency.
With regards to Tinplate Company of India, country's largest producer of tin-coated and tin free steel used for metal packaging, Chatterjee said with Tata Steel holding close to 75% now, there would be higher synergy and alignment between the operations of the parent and the subsidiary company.
Chatterjee, who is the chairman of the Jamshedpur-based packaging outfit, however, ducked the queries from shareholders on merging the subsidiary with Tata Steel.
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