Tata Steel sees Orissa plant output by March 2013

Tata Steel, the world's seventh-largest steelmaker by output, expects to start production from a new Orissa plant by end-March 2013, Managing Director Hemant Nerurkar said on Monday.

The plant at Kalinganagar in Orissa will have initial capacity of 3 million tonnes, which would eventually be doubled.

Tata Steel signed the initial memorandum for the plant with the local government in November 2004 and preliminary work on land acquisition and resettlement of locals is still under way.

Nerurkar said the company was likely to invest Rs 170 billion (USD 3.77 billion) in the plant's first phase.

Tata Steel acquired Corus, Europe's second-largest steelmaker, in 2007 for USD 13 billion, in the largest overseas acquisition made by an Indian company so far.

European operations account for two-thirds of Tata Steel's global capacity of about 30 million tonnes, while current Indian operations contribute a quarter.

It also has units in Thailand and Singapore.

The steel industry globally has been caught in a margin squeeze since mid-2010, when raw material costs began to steadily rise but steel prices dropped as activity slowed as recession hit developed economies.

While demand is improving from the auto sector, the other key market, construction, is struggling to pull clear of the crisis.

Tata Steel said last week its margins would remain under pressure because of increased raw materials costs as it reported quarterly net profit more than doubled, driven by demand in Europe and growth in its Indian operations.

Nerurkar said steel prices were likely to be volatile.

He also said the company would like to retain its stake in Australia-based Riversdale Mining Ltd.