Tata to spend 420m pounds/year to streamline Corus' focus

Tata Steel is resizing its European operations to ensure Corus is geared to handle any economic environment in Europe. CNBC-TV18's Sajeet Manghat and Ashwin Mohan report on the company's plans at home and abroad.

Tata Steel is standing strong post its Riversdale stake sale. Not only does it now have a cash kitty of USD 3 billion for future growth, but its net debt is also down to USD 9.5 billion. The company is now looking to use the available funds to ramp up existing operations. On the domestic front, Tata Steel is expected to add another three million tonne of capacity by the year end to take it to a total of 10 million tonne. Globally, the company is also looking to resize its Europe operations. It will spend 420 million pounds annually for the next few years to ensure Corus has its focus right. (Know all about the deal HERE) HM Nerurkar, managing director of Tata Steel, said, "We have recently announced a new project, which we will operate in a flexible manner. For example we may have a capacity of say 4.5 million tonne. But we see a market of 3-3.5 million tonne. So we will tune our operations to that market requirement. But it will be a mothballed, not a closure or a sale, so that incase the market improves tomorrow, we should be able to quickly ramp-up." Tata Steel is also moving to ensure long-term coal security for Corus. Koushik Chatterjee, chief financial officer of Tata Steel, said, "I guess we will conversations in the future to understand how this project can become bigger, larger and more meaningful. That conversation has not happened. So as of today for the 10 million tonne the outlays are couple of USD 100 million over the next few years." But even though developing coal assets form a significant part of Tata Steel's plans, it is also targeting fresh Greenfield assets that it can jointly develop. "It will certainly not be standard conventional asset because if you go for standard conventional asset, the valuations are so high, it's not really worth it at this juncture," Nerurkar added. There are some rough patches though with the company set to close some facilities in Europe but Tata Steel says these measures will ensure it meets its EBITDA target of USD 100 per tonne on a sustainable basis. Did you miss: Tata Steel sees slow recovery at Corus