Tata Steel has sought the consent of the Odisha government to sell products rolled out by its Kalinganagar steel factory outside of the state. According to a memorandum of understanding (MoU) signed with the state government, the steel maker is barred from sale of its manufactured products beyond Odisha. The restrictive clause though does not apply to exports as Tata Steel has been shipping its speciality steel products overseas like Tata Ferroshots and a special grade of hot rolled (HR) coils.
The state government has of late decided to renew the lapsed MoUs with steel companies. Tata Steel has viewed this as an opportunity to amend the previous clause restricting it to sell its products outside Odisha.
“Yes, we have urged the state government to allow us to sell the steel products outside of Odisha. There is not enough demand within the state to absorb all our products”, a company official admitted.
A government official in the know said, “Tata Steel’s proposal is under the consideration of the finance department since it has some revenue implications.’’
Though Odisha has a nameplate capacity of 21 MnT annually in steel making, hardly 2.6 MnT is consumed within the state. The consumption of finished steel points to the lack of downstream industries despite the presence of steel majors like Tata Steel, Jindal Steel & Power Ltd (JSPL), Jindal Stainless Ltd (JSL) and Bhushan Steel.
A report by KPMG has spelt out the roadmap for development of a downstream steel ecosystem in Odisha. This can be achieved with investment in basic infrastructure creation, supply commitments to downstream units and tax concessions. Though two downstream steel parks have been announced in the state with Jindal Stainless Ltd (JSL) and JSPL as the anchor tenants, nothing has taken off at the ground level.
Tata Steel, meanwhile, had the urgency to sell its products as the company is looking to achieve its first phase rated capacity of three MnT pa.
Tata Steel has achieved two million tonne of hot metal production at its Kalinganagar blast furnace. The company’s ramp-up to three million is on schedule. It is committed to further expansion and there is a proposal to increase the capacity of the plant from three MnT pa to eight MnT pa in the second phase.
Tata Steel intends to make Kalinganagar a world class benchmark as far as productivity of manpower is concerned. Deployment of state-of-the-art technology and innovations would contribute to this endeavour.
As one of the options for raw material security for Kalinganagar, Tata Steel has struck a deal to acquire 100 per cent equity in Brahmani River Pellets Ltd (BRPL) at an enterprise value of INR 900 crore. BRPL owns a four mtpa pellet plant at Jajpur in Odisha and another 4.7 MnT pa iron ore beneficiation plant at Barbil- both are connected through a 220 km underground slurry pipeline. The acquisition of BRPL is expected to reduce cost of blast furnace operations and enhance operational efficiency of the Kalinganagar project.
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