New Delhi: Tata Steel, India's second largest private steel marker, has differed with state-run SAIL on the need for setting up an equipment manufacturing facility in the country saying enough capacity is lying outside to be sourced from.
"I am not sure whether we should do be doing it or not... We have issues on land, on raw materials. Who knows at what speed one is going to grow? With these kind of uncertainties, you expect someone to invest in some huge plant and machinery, is not correct," Tata Steel Managing Director H M Nerurkar told PTI.
Steel Authority of India (SAIL) Chairman C S Verma had earlier said as the country would be adding 120 million tonnes capacity by 2020, it would require USD 120 billion investment, including USD 72 billion on plant and machinery.
"But not even a single manufacturing facility to make machinery for steel-making is here. We need to have some," Verma had said.
Nerurkar, on the other hand, said, "Look, there is a huge manufacturing base available in China. There are equipment manufacturers all over the world and you are not going to put up steel capacity like China at the rate of 40-50 million tonnes per annum (mtpa). Somebody invests like this and then tomorrow you don't put up the capacity, it will be wrong."
According to industry thumb-rule, investment to the tune of USD one billion is required for every one million tonne incremental steel capacity addition. Plant and machinery comprises over 60 percent of the total investment needed.
"We don't have equipment. Almost all that is required in an integrated steel plant is being imported. Had there been a manufacturing base in the country, the cost of projects would have come down and we would have the advantage of procuring machinery from indigenous sources," Verma had said.
Incidentally, both the private sector and the PSU are on an expansion spree. The pipeline is even greater.
Tata Steel is working on to raise capacity by nearly six mtpa. In addition, it plans to add at least nine mtpa capacity through a new plant in Karanataka and through the second phase of expansion at its yet-to-be started plant at Kalinganagar in Odisha.
On the other hand, the state-owned steel-maker is in the midst of expanding its crude steel production capacity to 21.4 mtpa from 12.84 mtpa now with Rs 72,000 crore investment.
On top of this, SAIL plans to invest Rs 1,31,000 crore to raise capacity from 21.4 mtpa to 45 mtpa to meet the nation's rising steel consumption, now way below the world average.
First Published: Thursday, October 18, 2012, 16:52