In a clear indication that the expansion plans of India?s largest and the world?s sixth- biggest steelmaker would not be hampered by the economic slowdown, Tata Steel managing director B Muthuraman has said the company?s liquidity position is ?very strong? and is sitting on cash of ?over $2 billion? (over Rs 9,500 crore).

In an interview with FE, Muthuraman said if required, the company would tap the capital markets to raise funds. However, it was not required at this point. ?Tata Steel?s liquidity position, going forward, is good? we will approach the market as and when it is necessary.?

Moody?s Investor Services had downgraded the company?s rating to Ba3 with a stable outlook in June due to ?an anticipated weakening of the company?s financial profile?.

The company has last month raised $500 million (about Rs 2,375 crore) through GDRs, mainly to finance the 3-million-tonne expansion of its Jamshedpur works, which would raise the capacity to 10 mtpa by mid-2011.

The company?s current production capacity within India is 6.8mtpa. It plans to raise the capacity to 16 mt

by 2014, investing about

Rs 40,000 crore. Muthuraman said the company?s expansion plans in India, including that of its 6 mtpa greenfield project at Kalinganagar in Orissa, were ?absolutely on schedule?.

Going ahead, he said demand for steel has halved globally, forcing steel companies in the US and Europe to bring down capacity utilisation accordingly. But in India demand was growing by around 5.5% quarter-on-quarter, though prices were down. Tata Steel had outperformed this growth rate selling 20% more in the first quarter, which meant it has enhanced its marketshare, Muthuraman said.

Though Tata Steel?s European operations would get affected to the same extent as its rivals, its Southeast Asia units, Singapore-based NatSteel Holdings and Tata Steel Thailand, would be ?somewhat less affected than Europe?.

So, Tata Steel Europe?s contribution to the overall revenues this year would be 55-60% compared to around 70% last year. ?Tata Steel India would obviously be giving much more? to the bottom line, he said.

Moving on to Corus, Muthuraman said the ?weathering the storm? programme, launched in the second half of 2008-09 by Tata Steel UK, has generated a savings of about?750 million. In FY10, the savings would be ?2 billion.

Tata Steel?s European operations, which came into its fold with the acquisition of Anglo-Dutch firm Corus in 2007, would cut operational costs over the next six years, as by then it would become 50% self-sufficient in raw materials by sourcing iron ore and coal from its own mines.

?Our strategy is to ensure that over a period of the next five to six years, Corus, now called Tata Steel Europe, gets 50% of its raw material needs from assets on an ownership basis,? Muthuraman said. Tata Steel has been looking for iron ore and coal resources globally ever since it acquired raw material-deficient Corus in January 2007.

The steel major had only last month acquired additional shares in the Australia?s Riversdale Mining Limited (RML), through an indirect wholly-owned subsidiary, Tata Steel Global Minerals Holdings Pte Limited. It now has 19.38% holdings in RML.

Again, Tata Steel, which holds a 19.9% stake in Canada?s New Millennium Capital Corp (NMC), had in June announced (along with NMC) the start of a feasibility study of the Direct Shipping Ore project and formation of a joint steering committee to monitor its progress.

The steel major also owns a medium-sized iron ore mine in South Africa, which too would help meet Tata Steel Europe?s needs to begin with.

?In India, the construction sector is doing well, though just now the sector?s demand was not as good (because the monsoon has not been so good) as it was looking to be some time ago?, he said.