Former chairman-cum-managing director of Tata Steel Russi Mody, flanked by Tata Sons director J.J. Irani (left) and Tata Steel managing director B. Muthuraman in Jamshedpur on Monday. Picture by Bhola Prasad

Jamshedpur, March 3: The Tata Steel group has set a target to double its return on investment in the next four years.

Having operations in the UK, the Netherlands, India and Southeast Asia, the group is now operating at a 16-17 per cent return on investment.

B. Muthuraman, managing director of Tata Steel, said the target was to take the return on investment to 32 per cent by 2012.

This is part of a road map, called Vision 2012, which the top management had recently unveiled before its employees.

“It is a comprehensive document, created by the people of Jamshedpur, Southeast Asia, the UK and the Netherlands,” Muthuraman said at the sidelines of the Founder’s Day celebrations at the steel city today.

The group expects to meet the formidable target by quickly implementing expansion projects in India and abroad, improving the product mix and driving down costs by securing coal, iron ore mines and upgrading its plants.

Philippe Varin, chief executive officer of Corus Ltd, who also participated in the celebrations, said the target was “stiff”. “If we can do it, it will be a global benchmark in value creation,” he said.

Corus, whose acquisition last year vaulted the Tata Steel group from the 56th position in the global pecking order in terms of capacity to sixth, will have a big role to play if the group wants to meet its target.

Varin said the target was to increase the share of value added product in total production rather than increasing volumes.

Corus will soon finish the construction of a cold rolling mill and a galvanising line at IJmuiden in the Netherlands. It is also expanding its value added product range at Scunthorpe in the UK where it makes rail. Put together, these new facilities would cost $560 million to Corus.

The margin improvement through the valued added products coupled with operational efficiency would translate into value creation worth $600 million to Corus.

However, Varin said that securing captive raw materials such as iron ore and coal was critical for achieving the target to double the return on investment.

The group has capacity to meet 20 per cent of its raw material requirement, which is expected to rise to 50 per cent by 2012.