Tata Steel Ltd will add capacity on its own in the Indian market as opposed to striking joint ventures, the company’s top management said, taking a divergent route from its larger domestic peer JSW Steel Ltd.
Asia’s oldest steelmaker prefers to have complete control over its operations in its home market, Tata Steel managing director T.V. Narendran said in an interview. In fact, the company was looking to buy out its existing joint venture partners wherever possible to merge all steelmaking operations under one company, he said.
“We’ve gone down that path in the past, and our own view is that in our home market, we would rather do things ourselves because this is the most attractive market in the world,” said Narendran, who has led Tata Steel for over 15 years.
On Friday, announced its decision to buy the 23% stake of its German partner IQ Martrade Holding in their logistics joint venture TM International Logistics Ltd for ₹335 crore. In December, the company similarly acquired the 50% stake of its partner BlueScope Steel in their downstream steel joint venture.
This comes at a time when has stitched two key 50:50 joint ventures with Japan’s JFE Steel and South Korea’s Posco to speed up capacity expansion in India. The joint ventures are expected to give the company 16 million tonnes per annum (mtpa) capacity by 2032. This will take the company’s domestic steel manufacturing capacity to 78 mtpa from 34.2 mtpa currently.
Over the same period, Tata Steel is expected to increase its domestic capacity to 40 mtpa from 27.4 mtpa at present.
This sets India’s two largest steel companies on divergent expansion routes. The expansion strategies of steel companies assume importance in context of the surging demand for the alloy in India. India’s domestic steel consumption is expected to reach 260 mtpa over the coming six years from about 160 mtpa in FY26, as per an estimate from JSW Steel.
The decision to focus on solo expansion could increase the gap between the capacities of India’s two largest steel companies. However, Narendran believes the right choice for Tata Steel is to prioritize full control over India operations rather than bringing in joint venture partners for speedier expansion.
“Those options were available with us in the past. Whether it was in Kalinganagar or anywhere else, there were people interested to partner with us, but we chose not to because we felt that our advantage lies in being totally in control, at least in our home market,” he said.
Analysts at ICICI Securities wrote in a report on Monday that Tata Steel was driving its financial turnaround by prioritizing Indian capacity expansion and European cost rationalization. Domestic capacity in India is projected to scale from 26 mtpa to 40 mtpa over the coming 5–6 years, they noted.
European hangover
New headwinds continue to emerge for Tata Steel in its European operations. The company may have to shut the coke and gas ovens at its Ijmuiden facility in the Netherlands following a push from the local environment watchdog. The company will have to purchase coke from the market, increasing costs for its profitable Dutch business.
“While the recent Netherlands environment order for potential revocation is tied to the coke and gas unit, we note the rolling mill and caster had also recently been shut down. All this also creates uncertainty and delays around transition to DRI-EAF here, as (Tata Steel Europe) will have to try and make sure its future investments are protected against any such moves,” analysts at Ambit Capital noted on Monday. DRI-EAF refers to Direct Reduced Iron and Electric Arc Furnace, a modern way of highly efficient steelmaking.
Meanwhile, in the UK, the company could face delays in getting connectivity to the grid for electricity. Tata Steel is investing in a transition to electricity-based steel manufacturing after shutting down its -based units last year, and the delays could add another hurdle to its plans.
This could lead to a 6-12 month delay and impact the return ratios of the project, the Ambit Capital analysts noted.
Shares of Tata Steel Ltd closed 3.21% lower on the on Monday at ₹209.85. Benchmark Sensex ended the session 0.1% higher.