Jamshedpur, May 11: Tata Steel has decided to set up a new company, Tata Blue Scope, for downstream processing of steel. The new unit will be operational in 3-4 months.

The announcement was made by Tata Steel managing director B. Muthuraman at the inauguration of its expansion programme at the Steelenium Hall this evening. The expansion programme was inaugurated by chief minister Arjun Munda.

State finance minister Raghubar Das was also present on the occasion.

However, the managing director of the steel giant declined to reveal much about the new unit at this juncture.

“We have major plans for this new company in downstream processing of steel but this is not the right moment to discuss it,” he said.

He refused to specify the amount to be invested.

Sources hinted that the new company would be involved in downstream processing like coating of cold rolls and other products.

Muthuraman said the company has plans to invest over Rs 12,000 crore over the next five years in its expansion and modernisation programme. This exceeds the outlay of Rs 10,000 crore that Tata Steel had promised to the government of Jharkhand.

"We have already invested over Rs 2,500 crore and have sanctioned the proposal for another Rs 4,500 crore to modernise and expand the production from five million tonne to seven million tonne by August 2008," said the steel major chief.

The remaining Rs 7,000 crore would be invested before the year 2010 that will take the total crude steel production of the company to 10 million tonne.

He also referred to the commitment of the company to promote other industries in Jharkhand by purchasing its requirements from local industries. The company at present purchases various items adding to about Rs 1,500 crore every year from local industries.

"If everything goes as per plan, Tata Steel would purchase items worth about Rs 4,000 crore every year from the local industries," he added.

Later, chief minister Arjun Munda said the steel major has agreed to set up a new township at the place where it plans to come up with a three-million tonne capacity steel unit.