As the economics of captive mining become less compelling and downstream businesses offer greater value, Tata Steel is recalibrating its long-term growth strategy while retaining the flexibility to expand upstream where returns justify the investment. Managing director and CEO TV Narendran and Chief Financial Officer Koushik Chatterjee in an interaction with Urvi Malvania discussed the company’s investment priorities, raw material strategy, automotive business, recycling plans and expansion roadmap.
How will the capex for Neelachal Ispat expansion be funded?
Koushik: Mostly through internal accruals. It will take about four years to build, and the payment cycle continues even after commissioning because of performance guarantees, retention payments, etc. We do not intend to undertake any specific project financing at this stage.
What drove 21% YoY growth in the automotive segment?
TVN: Growth in Tata Steel’s automotive volumes has been driven by new facilities at Kalinganagar. The cold rolling mill was commissioned in December 2024, followed by annealing and galvanising lines. While the company has long been strong in hot rolled products, cold rolled and galvanised volumes have risen as the new mills received customer approvals. Cold rolled products are already approved, while galvanised products are still undergoing qualification, supporting further growth alongside expanding automotive demand.
What advantages does Tata Steel see in focusing on approval-based segments such as automotive, oil & gas and shipbuilding?
TVN: These are more discerning customers who prioritise quality over price, with lengthy qualification processes and gradual volume ramp-ups. Building a meaningful market share, such as 50% in automotive, can take 10-15 years, but once approved, the competitive field narrows significantly. Rather than competing with hundreds of steelmakers, Tata Steel aims to compete with a handful of qualified suppliers, making these segments attractive despite the longer gestation period.
How does Tata Steel balance upstream expansion with greater downstream focus in its long-term growth strategy?
TVN: Upstream steelmaking is highly capital-intensive and continues to depend on imported coking coal. Tata Steel sees significant value in downstream businesses, which are less capital-intensive, more customer-focused and offer consolidation opportunities in fragmented markets. While the company will continue investing upstream where value exists, it is not compelled to announce multiple new projects. Existing assets already provide the option to reach 50 million tonnes, with Maharashtra offering additional capacity if required. Going forward, Tata Steel’s downstream strategy will be independent of its upstream expansion, allowing it to build larger downstream businesses while sourcing steel from the market whenever it is commercially attractive.
How does Tata Steel balance captive mining with buying iron ore, including imports, amid evolving raw material economics and supply risks??
TVN: The cost advantage of captive iron ore has declined as higher taxes, levies and auction premiums have eroded the economics. Captive mining is valuable only if it provides either a cost advantage or supply security. Supply security is also less compelling because we already import key raw materials such as coal and limestone and can diversify sourcing across geographies. Iron ore is a liquid global market with ample availability. While Indian ore has high iron content, imported ore can offer better value-in-use through superior quality, improving blast furnace performance despite a higher purchase price.
Koushik: About 80% of the global steel industry is not integrated with iron ore. More important than volume is value-in-use, as buying higher-quality ore can improve blast furnace productivity and reduce overall costs, making market sourcing a valuable strategic option.
How are you sourcing scrap for the electric arc furnace project in Punjab?
TVN: We commissioned our recycling facility in Jhajjar in 2019, just before Covid, although work on the business began eight or nine years earlier. We already source a significant amount of scrap through the facility and our FerroHaat app, which enables small suppliers to sell scrap with greater transparency and predictability. About half a million tonnes of scrap is available through this ecosystem and is processed at Jhajjar before being sent to Ludhiana. Equipped with a shredder and baler, the facility is India’s first organised scrap processing unit. We plan to replicate this model by establishing similar processing facilities alongside steel plants in other parts of the country
Have you identified the next locations?
TVN: The next recycling facility will be announced in western India within the next six to 12 months, followed by one in the south. Having understood the business through our northern facility, we are now in a position to develop both simultaneously.