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Tata Steel plans $1.7-billion expansion
By siliconindia
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Thursday, 01 July 2004, 19:30 IST
MUMBAI: Tata Iron and Steel Co (TISCO), India's second-biggest steel maker, said on Thursday it plans to spend Rs 78 billion ($1.7 billion) to increase its capacity by half to meet demand in the rapidly expanding economy.
The planned increase of 2.4 million tonne, TISCO's biggest one-time expansion, is expected to be completed by 2009 and will take its annual capacity to 7.4 million tonne.
Steel consumption in India is expected to increase by about two-three million tonne each year for the next few years and could possibly exceed 45 million by 2010, TISCO said in a statement.
"Given the buoyant steel scenario in India, there would be a supply shortfall within a period of two years if no new capacity comes up," TISCO said.
The expansion would be funded by both internal resources and long-term borrowings, it said.
Shares of India's oldest steel maker rebounded on the news and were trading up 0.48 per cent at Rs 302.40 by afternoon, off the day's low of Rs 293.75, while the key share index -- Sensex was up 0.72 per cent.
Consumption of steel has grown at a steady rate of about five-six per cent over the last decade and reached about of 32 million tonne in the year ended March 2004.
"This growth rate is likely to accelerate with consequent and rapid growth in the Indian economy," it said.
The farm-dependent Indian economy expanded by 8.2 per cent in the fiscal year ended March 2004, the strongest advance in nearly 15 years. Analysts expect the growth momentum to continue as the country is expected to receive normal monsoon rains this year, a repeat of last year.