For Tinplate Company of India (TCIL), a subsidiary of Tata Steel, the ongoing capacity expansion at Jamshedpur will help retain its market dominance, and expand product portfolio and export markets, a senior company executive told Moneycontrol in an exclusive chat on April 5.
“We have reached our full capacity after our debottlenecking. So it's the right time to increase capacities,” said RN Murthy, managing director. On April 3, TCIL undertook the ground-breaking ceremony for the expansion project. Under this first phase of expansion, TCIL will raise its capacity to 715,000 tonnes per annum (TPA) from the current 415,000 TPA at Jamshedpur. The Rs 2,000-crore expansion is likely to be completed by 2026.
Murthy pointed out that the expansion is critical to ensure TCIL’s dominant market position in the packaging steel segment. He pegged TCIL’s current market share at a significant 48-50 per cent. TCIL’s overall sales grew 18 percent year-on-year in FY22.
“The market is growing at 6 percent to 7 percent per annum. We also have a very good footprint in the international market. We export 20 to 30 percent of our products, and it's integrated with the downstream strategy of Tata Steel,” Murthy said, explaining the rationale behind the expansion. Tata Steel holds a 74.96 percent share in the company.
In FY22, TCIL exported 20 percent of its output to Europe, West Asia, parts of Africa, Southeast Asia and India’s neighbouring countries.
Murthy expects demand from edible oil and paints companies, followed by the processed foods sector, to drive the 6-7 percent demand growth expectation. A low per capita consumption coupled with the push for sustainability, Murthy said, should help increase demand for packaging steel in India. The demand for the product in India, Murthy said, has moved in tandem with the country’s consumption story, particularly consumer demand for larger quantities.
Commenting on competition from other packaging materials such as paper and plastic that could prove to be cheaper but less sustainable, Murthy said, “(Demand for packaging steel) will depend on how much the brand owners believe that it helps them and how much the Indian consumer is willing to pay for that additional cost.”
Despite the cost difference, Murthy expects the trend for sustainable packaging to rise in India in the long term. “Typically, we have seen that tinplate is better for the bigger pack size and plastic is more competitive for the smaller pack size. But premium products even in smaller pack size abroad use tinplate. India also is also evolving, right? So it will happen but like all other things, it is the question of when. That’s something we track regularly,” he said.
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