Tata Steel seeks to raise $2 billion to fund Indian expansion
Tata Steel Ltd. plans to raise as much as 128 billion rupees ($2 billion) in a rights offer to help add capacity in India, where demand for the alloy is forecast to triple in over a decade. The money will be used to build and buy mills as well as to repay debt, the company said an exchange filing Tuesday. The board also approved increasing the capacity of its Kalinganagar plant in Odisha by 5 million metric tons. The addition, to be done over 48 months at a cost of 235 billion rupees, would boost Tata’s local capacity to 18 million tons, it said.
Tata Steel has sharpened its focus on the Indian market after selling off some unprofitable assets in the U.K. and agreeing to merge its European operations with Thyssenkrupp AG. The Mumbai-based company and rivals including JSW Steel Ltd. are betting on Prime Minister Narendra Modi’s plans to build roads, ports and power plants in the world’s second-most populated nation, and the growing demand for automobiles and homes to spur sales.
The mill is raising production capabilities to meet the requirements of automotive, general engineering and other value-added segments, it said in the filing. The costs for ramping up the Kalinganagar facility include raw-material capacity expansion, upstream and midstream plants, and a cold-rolling complex, it said.
Tata Steel, with an annual capacity of 13 million tons, is India’s largest producer after JSW Steel and Steel Authority of India Ltd. India’s steel consumption is forecast to almost triple to as much as 240 million tons by 2030, with the majority being used in construction, according the Indian Steel Association.