Prime Minister Narendra Modi, on Friday, launched the national vehicle scrappage policy, saying it will help phase out unfit and polluting vehicles and also promote a circular economy.

CNBC-TV18’s Nisha Poddar spoke to Koushik Chatterjee, executive director and chief financial officer at Tata Steel, on the scrappage policy. He also spoke on a range of other issues like steel prices and the company's M&A plans.

On scrappage policy, Chatterjee said, “The new scrappage policy is actually a carbon friendly policy. The scrappage policy provides that there will be redundancy of automotive cars and scraps being produced over the next 5-7 years. It also depends on the state of the economy, because as economies mature, the consumption of white goods, cars, automobiles, etc., increases and then the scrappage turns into a useful circular product, which then can be recycled and used. We see that happening in China now, but even China is just about starting to produce more scrap.”

“So, scrap related technology is also improving energy, consumption needs to be more from green sources, which is the kind of integrated work that needs to happen. India has a very large domestic market in steel, and therefore, I think compared to other markets, India is in a good position to actually be more circular, as and when the scrappage numbers become more material,” he said.

On steel prices, Chatterjee said, “I think the spreads in Europe in particular, is going to expand materially but India spreads will hold, so I think that is how we are looking at it.”

On M&A, he said, “You saw in Bhushan, we were very clear that is the business that we would put our best foot forward and I think we have been pretty aggressive and post the acquisition, we have integrated very well and it has paid back significantly. So, where there is a need, we will certainly look at it. What value we can create is the main driver of how we will position on that, so without getting into specifics - our past track records have shown that we can be aggressive if we think that it creates value for us.”

(Edited by : Dipika)

First Published:Aug 18, 2021 1:35 PM IST