Tata Steel plans to develop an eco-system for ancillary and downstream units in the vicinity of its Kalinganagar project in Odisha's Jajpur district. It has operationalised a capacity of three million tonnes a year in the first phase.
The proposed complex for ancillary and downstream steel units is set to be developed on 400 acres. It seems likely to be modelled on the Adityapur Industrial Area in Jamshedpur, the company's original base. Located eight km from the steel city there, the Adityapur Industrial Area Development Authority is home to nearly 800 large, medium, small and tiny enterprises. Together, these provide direct employment to about 28,000 people (an estimated 11,500 tribals and locals); the latest annual turnover was Rs 3,550 crore.
Tata Steel is believed to have started negotiations with select downstream and ancillary makers. At a recent meet organised jointly with the Odisha government at Kalinganagar, it had invited around 40 companies in the sector.
"Tata Steel is looking for downstream and ancillaries which can service its mother plant at Kalinganagar. They are possibly trying to replicate the Jamshedpur model," said an industry source.
Tata Steel has encouraged and facilitated the setting up of ancillaries and downstream units in and around Jamshedpur. Some of the group ancillaries and downstream units include The Tinplate Company of India, Tata Steel Processing and Distribution, Jamshedpur Continuous Annealing & Processing Company, Tata Pigments, Tata Bluescope and Jamipol. Aomw of these might be persuaded to put up plants around Kalinganagar.
"Over the years, Tata Steel has been able to attract high-end and technology-driven companies such as Nippon Steel and Sumitomo Metals, Bluescope Steel, Robbins Fraser, Praxair, etc, to invest in downstream and ancillary units in Jamshedpur. The company has also facilitated the development of ancillaries that are part of the vendor base that supply goods and services to Tata Steel," said a company spokesperson.
An official with the Odisha Industrial Infrastructure Development Corporation (Idco) said the state government would partner Tata Steel in this planned development. "The Adityapur Industrial Area model will be replicated at the downstream park coming up near the Kalinganagar facility. Small units have mushroomed in Adityapur because of the Tata Steel unit there. The Odisha government with Tata Steel will play a key role in developing the infrastructure of the park. The steel major may impress upon its vendors to put their facilities here," said an Idco official.
Ancillary and downstream units have been identified as one of six priority sectors by the state government. Sanjeev Chopra, principal secretary with the state industries department, said: "This is an opportune time for industry to closely look at setting up base at the Kalinganagar industrial region. Nearly 10 per cent of the land for large projects has been earmarked for setting up ancillary and downstream industrial facilities. Additionally, the state will provide a host of fiscal incentives, including power subsidy, and various other non-fiscal incentives."
Opportunities for downstream and ancillary industry exist in areas like equipment manufacturing, foundries, flat & cold rolled products, fabrication, machining and precision equipment, appliances & white goods, automobile components, fasteners and kitchenware.
Though Odisha has a nameplate capacity of 21 million tonne (mt) annually in steel making, hardly 2.6 mt is consumed within the state. This is due to the lack of downstream industries. In a report, consultancy KPMG has suggested the government bring in a mechanism to enable commitment from the anchor units for supplying of at least 20 per cent of intermediate or finished products to downstream industries in the state.