Tata’s script a turnaround for NINL, expansion plans under-consideration

A former CPSE, NINL company was acquired by Tata Steel in 2022 
| Photo Credit:
FRANCIS MASCARENHAS

Nearly three years since acquisition, Tata Steel Ltd has orchestrated a dramatic turnaround for the Neelachal Ispat Nigam Ltd. (NINL) unit, transforming this once-struggling asset into an EBITDA positive entity.

Plans are afoot to ramp up capacities by nearly 450 per cent to 5.5 mtpa (million tonnes per annum); proposals regarding this is under consideration. It “will be taken up with the board soon”.

The Phase 2 expansion plans for the unit include taking it up to 9.5 mtpa. NINL’s current capacity is 1 mtpa. 

A former CPSE, the company was acquired by Tata Steel in 2022 as part of the steel-maker’s aggressive expansion in India with a focus on ramping up its long products play. The unit, hardly operational when acquired, had been a financial liability for its previous owners, plagued by inefficiencies, and an uncompetitive cost structure and losses. 

To specific questions on “major expansion projects”, TV Narendran, MD and CEO, Tata Steel said, the next one, “which will go to the Board is the Neelachal (NINL) one”.

“We have already gone through the public hearing,” he said during an investor call.

Narendran added: “….we go to the board only after we get all the regulatory approvals. Earlier… you get the board approval and then get the regulatory approvals, so which used to bring a lot more uncertainty into the schedules, whereas we’ve already done the public hearing and have applied for an environment clearance, to go up to 9.5 mtpa for Neelachal.”

“….but the one, which is most ready is the Neelachal one, which during this year, we will go to the board,” he said.

Turnaround numbers

According to Narendran, at the Neelachal plant almost ₹30,000 of cost per tonne was taken out.

“That’s why Neelachal today, a plant which was shut down because it was not financially viable, is today making… (positive) cashflows. When you acquire new assets, you obviously have to do a lot of work on cost take-outs, which is what we are doing in India,” he said.

In FY25, the NINL unit recorded ₹1,000 crore in earnings before interest, taxes, depreciation, and amortisation (EBITDA) reflecting a 19 per cent margin. This marks a significant leap from its earlier struggles.

The quarterly EBITDA was at ₹323 crore in the January-March period, with 23 per cent margin, alongside generating ₹1,000 crore in cash flow.

“Free cash flow exceeded ₹1,000 crore in Q4FY25,” a source said, requesting anonymity. 

According to Koushik Chatterjee, Executive Director and Chief Financial Officer, Tata Steel, the turnaround came following a wide cost take-out programme that slashed expenses by ₹6,600 crore in FY25.

For NINL specifically, it shed nearly ₹30,000 per tonne in costs since acquisition, a feat driven by operational improvements and raw material optimisation. 

“NINL will remain one of Tata Steel’s most promising growth prospects in the coming years,” Chatterjee said during the recent earnings call.

“Our work on engineering for the next phase of expansion in NINL is ongoing…. Our capital allocation will continue to be prioritised towards capacity growth and downstream facilities in structurally attractive Indian markets,” he said during the investor call.

NINL then

In January 2022, Tata Steel Long Products Ltd was declared as the highest bidder for NINL, at bid enterprise value of ₹12,100 crore. The unit had an integrated steel plant with a capacity of 1.1 mtpa at Kalinganagar, Odisha.

The company was running “huge losses”, with the plant being closed since March 2020. It then had debt and liabilities exceeding ₹6,600 crore (FY21-end) overdues of promoters (₹4,116 crore), banks (₹1,741 crore), other creditors and employees.

It then had a negative net-worth of ₹3,487 crore and accumulated losses of ₹4,228 crore then.

Published on May 21, 2025