Tata Steel has announced a capital expenditure plan of ₹16,000 crore for the fiscal year 2025, with nearly 75% dedicated to expanding capacities within India, particularly at the Kalinganagar plant in Odisha. The remaining funds will be allocated to the UK de-carbonisation programme. The company anticipates an 8-10% growth in steel demand in India, driving its aggressive investment strategy.
Doubling Capacity in India
Tata Steel is on track to double its capacity to 40 million tonnes per annum (mtpa) over the next few years. Under current plans, Kalinganagar’s capacity will increase from 3 mtpa to 8 mtpa in the first phase, with potential expansion to 16 mtpa. The company also plans to expand Neelachal Ispat Nigam Ltd (NINL) from 4.5-5 mtpa in the first phase to 10 mtpa and potentially beyond.
Additionally, a new electric arc furnace (EAF) plant with a 2 mtpa capacity will be established in Chandigarh. Meramandali (Odisha) will see its capacities expanded from 5 mtpa to 7 mtpa, with future plans to reach 10 mtpa. Tata Steel has secured land for these expansions and plans to add another 10 million tonnes in its existing sites if needed.
International Operations
In the UK, Tata Steel will close one blast furnace at Port Talbot by June-end and the second by September, while the coke-oven was shut down in March. However, the hot strip mill will continue operations during the transition period. The UK entity is expected to become EBITDA positive by Q3 FY25. Tata Steel plans to infuse £2.1 billion of equity into its UK operations to repay external debt and support restructuring costs.
In the Netherlands, Tata Steel’s operations are expected to be EBITDA positive by FY26. The blast furnace at IJmuiden, restarted in February after relining, is now fully ramped up. The Dutch government has expressed willingness to support the replacement of one of the two blast furnaces with a direct reduced iron plant and an EAF.
Financial Performance
T.V. Narendran, Managing Director and CEO of Tata Steel, stated, “Overall, the demand is expected to grow at 8-10% a year. That’s why we are bullish about growing in India. We have started work on Kalinganagar, Meramandali, and other sites, focusing on both capacity expansion and maintaining environmental standards.”
Tata Steel’s Indian operations have seen a 22% increase in EBITDA margins, although this was offset by operational losses in the UK and other issues in the Netherlands. The company remains confident in its growth strategy, leveraging its extensive land acquisitions and ongoing projects to enhance its production capabilities and meet the rising steel demand in India.