Tata Steel – Tubes Strategic Business Unit (SBU) was established in 1985 after the merger of the erstwhile Indian Tube Company Limited with Tata Steel. Over the years, Tubes SBU has emerged as one of the leading manufacturers of welded pipes in the country, with an installed production capacity of over 600,000 metric tonnes per annum.
Tubes SBU manufactures commercial, structural and precision tubes at its two plants, namely, the Standard Tubes Plant and the Precision Tubes Plant. We serve the customers, both in B2B and B2C segments through our focussed presence in Automotive, Boilers, Construction, Infrastructure and Retail segment.
In an exclusive interview with SteelMint, Mr.Ujjal Chakraborti, Executive-in-Charge (E.I.C), Tata Steel Limited (Tubes) discusses the growth plans of the company and highlights the specific drivers needed to fuel demand for the Tubes Industry in the coming months. Excerpts:
Q. Could you highlight what specific drivers would be needed (say, from Government), which will fuel demand for the Tubes Industry in coming months
A. Government needs to play a role both directly and indirectly to support demand upliftment in the country. Several indirect measures have been taken already by trying to support MSME sectors and increase liquidity in the marketplace – the full impact of which is yet to be seen.
The biggest role that Government can play is to continuously invest in Infrastructure projects both in urban and rural areas. Specifically, for Tubes, the growth would come from usage of hollow sections in these projects (Airports, Railway Stations, Metro Rails, Steel Buildings, etc.).
Also, there are ambitious plans for water distribution in the country, from irrigation to tap supplies where tubular products will play a key role. While many of these projects are announced, they need to be executed to create demand. Another area where Government bodies can influence higher usage of Tubes is by including hollow sections in Indian Standard (IS) coded (for e.g. use of hollow sections in IBC, Building codes). Also, there is a need to include quality control measures in use of good quality tubes in end applications.
Q. We all are aware of the Government’s aspiration of reaching Steel production levels of 300 Mt by 2030 from the current levels of 100 – 110 Mt. What are your views on the same, specifically with respect to impact on the growth of downstream businesses, such as Tubes?
A. The Steel Mission of having 300 mn t installed steel production in India by year 2030, is an ambitious one. For this to happen, firstly the consumption of steel has to increase at much higher rate that it has been so far (as mentioned, we were just above 100 mn t in FY20).
Another driver of this proposition is India becoming a huge exporter of steel, so that a bulk portion of the capacity can be exported. Today, the installed capacity of India is only ~140 mn t. Substantial amount of investment and government support would be required (for clearances, etc.) to enable the country to reach the target capacity.
As far as Tubes are concerned, as it has happened in developed countries, the growth rate will be higher than that of upstream steel growth rate. This is because more and more hollow sections will be used in buildings and infrastructure projects and this will fuel the required growth in steel consumption. So, the growth in downstream businesses, especially Tubes, will be quite robust in the coming decade.
Q. Any expansion plan for Tata Steel Tubes?
A. Today, courtesy the acquisition with Bhushan Steel (now Tata Steel BSL), the total Tubes capacity available with Tata Steel is approx. 1.3 mn t. But given the mix of segments we serve, and the growth envisaged in the hollow section consumption, these capacities are not sufficient to meet our customers’ demand in coming years. Hence, we are planning to expand our manufacturing bases, in more than one of the product categories. All the plans are on the drawing board at this point in time and we hope to execute them in coming 2-3 years.
Q. How is Tubes Industry impacted by Exports? Is there a major role played by China?
A. Tubes, as a product, does not travel long distances, except when it is specialized application like API or for automotive applications. So, Tubes exports does not form a large chunk of domestic production anywhere. Due to its low entry barriers, most of the markets have own home-grown Tubes industry. The commercial tubes, obviously, does gets exported only in an opportunistic way. China, too, exports only specialized tubes like in seamless category.
Q. Thanks. Lastly, wanted to ask you the key three focus areas where Tubes Industry needs to focus in near future to have a bigger & better impact on its customers?
A. We believe Tubes Industry has a bright future in domestic market in the coming decade; however, the industry needs to play its part responsibly. To answer your question, the three focus areas for improving customer impact are:
a) Tube industry should develop products that are aligned to the customer requirements and offering a value proposition with respect to alternatives- be it other steel products or competing material like wood.
b) The industry should invest in facilities that produce only Quality products that reach the customers, and comply to all the IS and Quality control norms as well
c) The industry needs to bring a solution based approach to assist customers understand the advantages of using tubular structure and help them convert from traditional material.
For Part 1 of this interview, click here (https://www.steelmint.com/insights/interview-h2-fy21-to-see-overall-steel-consumption-to-recover-to-80-90-tata-steel-tubes-197463)
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