Facing increased demand from the automobile industry for steel, Tata Steel announced on Friday that they would be increasing their auto-grade steel production to 1.2mn tonnes, in this fiscal year, a growth of 20%.
The steel manufacturer hopes to continue in the vein of a similar increase in capacity for auto steel over the next couple of years. They will also begun operations at their new 0.6mn tonne capacity, JV facility with Nippon steel manufacturer, to produce auto steel of high strength by 2013.
The managing director of Tata Steel, H.M. Nerurkar, said that in the year 2010-11, they had supplied auto grade steel to the quantity of 1mn tonnes, and for this year, they hope to reach 1.2mn tonnes. They have to increase their capacity by 15 to 20% every year to meet increasing demands from the auto industry.
The supplies from Tata Steel contribute to more than 40% of the steel used by the Indian auto industry. They added a 0.3mn tonne mill at Jamshedpur, and will also increase the capacity at their existing mills to 2.2mn tonnes from 1.5mn tonnes, according to Nerurkar.
When Nerurkar was asked to give his outlook on the prices of steel, he said that the prices were not likely to increase in June or even the next month.
The company also announced that their net debt has decreased from $10.5bn to $9.5bn. This was due to the fact that the cash reserves of the company rise from more than $3bn after the company received $1.12bn from the sale of their stake in Riversdale, and Australian mining company.
The company sold their whole stake of 26.27% in the Anglo-Australian mining company, Rio Tinto, last week, after announcing Rio Tinto announced its plans of delisting Riversdale following the acquisition of the firm in April, 2011.
The Group CFO of Tata Steel, Koushik Chatterjee, said regarding how they would utilise the fresh funds that the money would go to a general pool, following which the Board would make a decision on utilising it. They do not have to make any loan payments immediately, though they separately announced regarding large capital plans for expenditure this year.