A week after lenders of its UK-based subsidiary approved easing certain terms for a ?3.7-billion loan that was taken for the Corus acquisition, Tata Steel?s India operations, which have been showing a steady improvement month-on-month this year, have shown a 23% increase in production of saleable steel in May over the corresponding month last year.

On the back of robust demand from auto and construction sectors, the steel major has also witnessed a 18% increase in its sales volume in May to 4.69 lakh tonne, compared to 3.97 lakh tonne in May last year.

Crude steel output for the month went up 17% to 4.86 lakh tonne from 4.16 lakh tonne, while hot metal production rose 19% to 5.28 lakh tonne in May from 4.43 lakh tonne during the same month last year, Tata Steel said in a statement on Saturday.

During the month under review, Tata Steel saw its saleable steel production surging 23% to 5.01 lakh tonne, against 4.08 lakh tonne.

The sale of long products, mainly used in the construction industry, increased 34%, while that of flat items, used by auto and consumer durable sectors, increased 9%, over the year-ago period. The company claimed that one of its steel melting shops in Jamshedpur achieved best-ever May production at 2.18 lakh tonne. Also, a merchant mill recorded best-ever May production of 30,710 tonne over 28,505 tonne during the same period last year.

The output of its hot strip mill and new bar mill also registered an impressive growth over May 2008, it said.

After commissioning a new 1.8-million tonne blast furnace at its Jamshedpur works unit, Tata Steel is in the process of enhancing its production capacity to 10.5 million tonne by 2010.

At present, the company?s Jamshedpur plant has a capacity to produce 6.8 million tonne of steel annually. Besides increasing the capacity of its existing unit, the steel major is in the process of setting up greenfield projects in Jharkhand, Orissa and Chhattisgarh.

While in Jharkhand it proposes to invest about Rs 42,000 crore for a 12-million tonne integrated steel plant, in Orissa it intends to pump in nearly Rs 22,000 crore for a six-million-tonne unit. The steel major also plans to invest Rs 18,000 crore for setting up a five-million-tonne steel plant in Chhattisgarh. For all the proposed greenfield projects, the company is in the process of acquiring land and mineral linkages.

On May 30, lenders of Tata Steel UK approved easing certain terms for a ?3.7-billion loan that was taken for the Corus acquisition. The approval from lenders means that all earnings-related covenants for the steel makers UK arm would not be tested till March 2010.

There would also be no increase in interest costs for the remaining tenure of the loan. This also put to rest the speculation that the company would be offering lenders an additional fee to agree to relax terms. ?As part of the package, Tata Steel Ltd will inject ?425 million into Tata Steel UK in a phased manner, of which around ?200 million will be used to prepay debt and de-leverage the European balance sheet,? a Tata Steel statement had said.

Surging ahead

•Tata Steel has registered a 23% increase in production of saleable steel in May over the corresponding month last year

•Crude steel output for the month went up 17% to 4.86 lakh tonne, while hot metal production rose 19% to 5.28 lakh tonne

•The sale of long products, mainly used in the construction industry, increased 34%, while that of flat items rose 9%

•The steel makers? production of hot strip mill and new bar mill also registered an impressive growth over May 2008

•At present, the company?s Jamshedpur plant has a capacity to produce 6.8 million tonne of steel annually

•In Jharkhand, the company proposes to invest about Rs 42,000 crore for a 12-million tonne integrated steel plant