Muthuraman: Fresh pastures

New Delhi, June 22: It’s time to shop again. With NatSteel within its fold, Tata Steel is on the prowl for fresh acquisitions in Southeast Asia and China.

Managing director B. Muthuraman said today the steel major was looking at buyouts in Southeast Asia-China region and was interested in steel plants with a capacity of up to 2-3 million tonnes (MT).

The plan to acquire yet another plant is part of a drive by the Tatas to turn into a global player in steel. Refusing to name the companies identified or the budget for such takeovers, Muthuraman said: “Discussions are on with some of the companies and the final decision will be taken soon.”

The Tatas feel the steel markets of the future are going to be India and China. Southeast Asia would also be part of the high-growth zone and hence the focus on “this entire region”, he added.

Earlier this year, Tata Steel had completed the acquisition of Singapore’s NatSteel for $486.4 million or Rs 1,313 crore. The firm is also planning to invest $1.1-1.2 billion in steel plants in Iran, taking advantage of cheap gas in the West Asian nation.

The Tatas are also trying to wrap up talks with Bangladesh for a $2.5-billion project to set up steel, power and fertiliser plants in that country.

Muthuraman said Tata Steel’s strategy was to build up capacity “organically and inorganically” to 15 MT at a cost of Rs 25,000 crore over five years.

Most of the expansion will be within India, especially at the Jamshedpur unit, as well as greenfield plants in Orissa and Chhattisgarh.

Muthuraman said he hoped to “add one million tonnes of capacity at Jamshedpur this year”.

Another two million tonnes will be added to the 5-MT Jamshedpur plant by 2008. Tatas also plan to set up a 6-MT steel plant at Dhubri in Orissa in two modules of 3 MT and a second 3-MT steel plant in Chhattisgarh.

“Much of the money for the expansion will come from internal accruals,” Muthuraman said. He pointed out that Tata Steel had an extremely low debt-equity ratio of 0.4, which would help it raise low-cost loans.

Muthuraman said he had been trying to persuade the top brass at the steel ministry and the Planning Commission to adopt a policy which encourages production for local markets, instead of exports.