Critical question for Tata Steel in Indian Steel Association’s change of guard

Representative Image

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

A change of guard at an industry association is normally a matter of routine, but not at the Indian Steel Association (ISA).

On May 19, the ISA appointed Dillip Oommen, the CEO of ArcelorMittal Nippon Steel India, as its president in an extraordinary board meeting. The circumstances were surely extraordinary.

The meeting had to be called after Tata Steel Managing Director & Global CEO TV Narendran had stepped down as the president on May 1, just a couple of months before the due end his tenure. It was probably the first time in the history of the association that a sitting president had stepped down.

Not just that. Tata Steel, the largest Indian steelmaker, also withdrew as a member of the Association, which plays a crucial role as a bridge between the industry and policymakers.

Narendran's resignation and Tata Steel's withdrawal point to a bitter divide among the industry players, say senior executives from the industry. "It was Tata Steel on one side, and the rest of the members, on the other," is how one senior executive explained it.

Responding to a query from Moneycontrol, Tata Steel spokesperson said:

"Tata Steel has withdrawn its membership from the India Steel Association (ISA) owing to various considerations. Accordingly, Mr. T. V. Narendran, CEO & MD, Tata Steel, has stepped down from his position as the incumbent President, ISA."

What were those considerations that prompted Narendran, and Tata Steel, to take the extreme step?

It all boiled down to one question:

What should be the association's response to the government's plan to advance the termination of captive mine leases to 2025 from 2030?

Tata Steel was against advancing the termination. On the other hand, the rest of the members, including JSW Steel, were for it, said a senior executive from the industry. Public sector company, SAIL and ArcelorMittal Nippon Steel - earlier Essar Steel - are also part of the ISA.

It is a crucial issue for the Indian steel sector. And, it is not difficult to see why Tata Steel was against the move.

The company's very foundation and legacy are tied to the discovery of iron ore in India. It was the discovery of the raw material in the eastern part of India, that led Jamsetji Tata, the founder of the Group, to set up India's first steel company.

For over a century, Tata Steel made the most of that first-mover advantage. The company, along with SAIL, were the only steelmakers in the country to have captive iron ore. The rest, including JSW Steel and Essar Steel, had to buy the all important raw material used in steelmaking, from the open market.

But, things changed when the Mines and Minerals (Development and Regulation) Act (MMDR Act) was amended in 2015. Consequently, by the beginning of 2020, points out a research note by CRISIL, mines with more than 640 million tons of iron ore have been auctioned in three years.

Moreover, earlier in 2020, the government proposed to terminate the captive mine leases by 2025, instead of the original timeline of 2030.

Tata Steel, which meets all its iron ore requirements from captive mines, will be the most hit. Not just that it will have to compete with the likes of JSW Steel - whose founder Sajjan Jindal has aggressively bid till now - and the bids have been extremely high. JSW Steel, for instance, will pay a premium of over Rs 130, for every Rs 100 of ore it produces from the mines in Odisha.

At rates as high as this, Tata Steel will lose its traditional advantage and its profitability will take a dent. For Narendran, whose second term at the helm gets over in 2023, maintaining the company's traditional advantage will be one his biggest priorities.